President Donald Trump’s strategy to seize control of Venezuela’s oil sector and engage American companies in its revival post the apprehension of leader Nicolas Maduro is poised to encounter several challenges — operationally, legally, and politically. The dramatic capture of Maduro marked the culmination of an intense pressure campaign by the Trump administration against Venezuela’s autocratic leader, with months of covert planning culminating in the most aggressive American intervention for regime change since the 2003 Iraq invasion.
The U.S. has formally charged Maduro with narco-terrorism, while the Venezuelan government has long maintained that Trump and the U.S. covet the nation’s abundant natural resources. Venezuela boasts the world’s largest confirmed crude oil reserves, estimated at around 303 billion barrels by the U.S. Energy Information Administration, surpassing both Canada and Saudi Arabia, and representing approximately 17% of global oil reserves. Despite this vast resource wealth, Venezuela’s oil output has dwindled to less than 1% of the global supply after peaking at 3.5 million barrels per day in 1999, as per OPEC data.
The decline in Venezuela’s oil production can be attributed to factors such as nationalization, mismanagement, and corruption, as noted by Heather Exner-Pirot, Director of Energy, Natural Resources, and Environment at the Macdonald-Laurier Institute. The country’s oil industry, along with other sectors, has been severely impacted by stringent U.S. sanctions dating back to 2015 when Caracas was labeled a national security threat. Subsequent sanctions imposed by Trump in 2017 and 2019 significantly curtailed Venezuelan oil exports to the U.S., culminating in a complete industry blockade characterized by Secretary of State Marc Rubio as an “oil quarantine.”
Roxanna Vigil, an international affairs fellow at the Council on Foreign Relations, highlighted the extensive timeframe and financial investment required to revive Venezuela’s oil sector, estimating a recovery period of several years to possibly a decade or more, necessitating tens of billions of dollars. Additionally, the sector faces a talent drain following the dismissal of numerous skilled workers from the state-owned Petroleos de Venezuela S.A. (PDVSA) during a 2003 strike orchestrated by then-president Hugo Chavez.
As Trump envisions a role for prominent U.S. oil companies in Venezuela’s oil industry revival, challenges extend beyond infrastructure to political and legal realms. Francisco Monaldi, Director of the Latin American Energy Program at Rice University, emphasized the need for foreign investments hinging on political stability, contractual clarity, and a business-friendly environment in Venezuela. The country’s transition from socialism and constitutional reforms would be imperative to attract foreign capital and reshape its economy.
Legal experts have raised concerns regarding the legality of the recent U.S. operation in Venezuela, emphasizing the importance of respecting the sovereignty of nations over their natural resources, as outlined in UN Resolution 1803. Amidst escalating tensions, the question of oil ownership in Venezuela remains contentious, with the Trump administration potentially contesting the legitimacy of past Venezuelan governments’ control over the oil industry.