Venezuela’s financial obligations to American oil companies are substantial, amounting to an estimated $10 to $12 billion in international arbitration awards following the nationalization of the country’s oil industry in 2007. The move, executed by then-President Hugo Chávez, forced foreign firms to either turn their holdings into joint ventures with state-owned PDVSA or exit the country altogether. Companies like ConocoPhillips resisted giving up majority control, leading to the seizure of their assets, including significant projects at Corocoro, Hamaca, and Petrozuata.
According to arbitration panels, these actions qualified as unlawful expropriations, as Venezuela failed to provide fair compensation or negotiate in good faith. The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) became the venue for these disputes, with ConocoPhillips winning an $8.7 billion ruling in its favor in 2019. Despite Venezuela’s attempts to annul this ruling, ICSID upheld it in January 2025, leaving a significant sum owed, including accrued interest.
ExxonMobil also faced similar circumstances, with a $1.6 billion award in 2014 for expropriating its Cerro Negro project, followed by an additional $77 million in 2023. This judgment has seen enforcement in U.S. courts, which have consistently noted that PDVSA operates as an extension of the Venezuelan government. For instance, a U.S. District Court previously ruled that PDVSA is the alter ego of the regime, allowing for the seizure of its assets to satisfy outstanding creditor claims.
Venezuela’s issues extend beyond arbitration awards to issues under U.S. contract law. Many of its sovereign bonds are governed by New York law, which imposes a six-year statute for claims. Senior U.S. officials have characterized the nationalizations as outright theft, with Vice President Vance calling for the return of Venezuela’s taken oil. President Trump described the seizures as potentially the largest theft of American property in history.
In the wake of the political upheaval following Maduro’s removal in January 2026, Trump signed Executive Order 14373 aimed at protecting Venezuelan oil revenues. This executive order seeks to safeguard funds held in U.S. Foreign Government Deposit Funds from judicial actions, essentially blocking creditor seizures. Crucially, it allows the U.S. Department of Energy to facilitate the sale of seized Venezuelan crude, aiming to manage the first shipment of 30–50 million barrels intended for the U.S. Gulf Coast.
The first sale, valued at approximately $500 million, completed in mid-January 2026, reported a complicated flow of funds. While reports indicate that about $300 million found its way through local Venezuelan banks, much of the revenue remains effectively under U.S. control. The administration argues that this setup protects the funds from creditors while allowing for targeted use in debt repayment, infrastructure recovery, and humanitarian efforts.
Critics, however, argue this structure is unconstitutional, contending it undermines Congress’s control over spending as outlined in the Constitution. They point out that having money in offshore accounts lacks the required transparency when U.S. resources are on the line. Despite these concerns, no court has yet ruled on the arrangement’s legality. The executive order relies on national-security provisions under the International Emergency Economic Powers Act, claiming the funds serve public sovereign purposes.
In encouraging U.S. oil companies to reinvest in Venezuela, the administration hopes to restore oil production to historical levels. Trump has indicated that recovery is possible within 18 months, arguing that U.S. capital is essential. However, companies like ExxonMobil and ConocoPhillips remain hesitant to commit without compensation for their past losses. Discussions for collaboration with Halliburton and SLB suggest these firms may provide equipment for refinery rehabilitation.
Despite efforts to revitalize the oil industry, major firms see Venezuela as high-risk. In response, Caracas has proposed a new oil bill with better contract terms, transitioning towards Production Sharing Agreements. This model would allow U.S. companies to recover costs and profits while Venezuela retains oversight. Proceeds from oil sales are accounted for, prioritizing American creditor repayment while still aiming to foster Venezuelan economic recovery.
Increased Venezuelan oil production could provide access to the world’s largest proven reserves, supporting U.S. energy firms while potentially lowering global oil prices. This strategy would ensure repayment of billions owed, stimulate job growth in the U.S. energy sector, and reduce the influence of countries like China and Russia in the region.
For Venezuela, these funds aim to facilitate economic recovery amid ongoing hardships. The administration has already disbursed $300 million for local needs. Proponents believe that with careful management, post-Maduro political stability, and debt restructuring, additional foreign investment may flow into the country. This could lead to improvements across various sectors, including the restoration of healthcare and infrastructure while combating corruption that plagued past administrations.
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