The history of U.S. involvement in Venezuela's petroleum industry dates back to the beginning of the 20th century, following significant oil discoveries in the 1920s. These discoveries propelled Venezuela into one of Latin America's strongest economies, though the nation experienced periods of instability due to fluctuating oil prices and governance challenges.[1] Issues such as corruption and mismanagement, compounded by eventual U.S. economic sanctions, led to a decline in oil production from approximately 3.5 million barrels per day to 400,000 barrels in 2020.[2]
In 2019, the U.S. imposed sanctions on Venezuela's state-owned oil company, Petróleos de Venezuela, S.A. (PDVSA), aiming to pressure President Nicolás Maduro to resign due to the political crisis in the country. In October 2023, the Biden administration temporarily lifted some sanctions on Venezuela's oil, gas, and gold industries in exchange for promises of political reforms, including the release of political prisoners and free elections in 2024. However, by April 2024, most sanctions were reimposed due to unmet commitments, although certain companies received individual licenses to continue operations in the oil sector.[3] Recently, on March 12, 2025, the Trump administration revoked Chevron's license to operate in Venezuela and it’s expected to have significant economic repercussions, potentially reducing Venezuela's oil production and further straining its economy.[3]
Early history
The US involvement in Venezuela’s petroleum industry began in the early 20th century when oil was discovered by Royal Dutch Shell geologists at La Rosa, a field in the Maracaibo Basin.[1] In a matter of years, by 1929, annual production exploded from over a million of barrels to 137 million, making Venezuela at the time second only to the United States in terms of total output.[4]
By the 1930s, under the presidency of Juan Vicente Gomez, three foreign oil companies controlled about 98% of production, one of them British-Dutch, Royal Dutch Shell, and the other two American: Gulf Corporation, and Standard Oil.[1][5] From 1929 to 1933, the global depression caused an immense collapse in the oil demand; simultaneously, major finds in Oklahoma and Texas and improvements in the oil industry made the US curtail their importation of oil.[4] For Venezuela, this had a huge impact since at the time they had been sending more than half of their total production to the US.
In 1943, one of Gomez's successors, Isaias Medina Angarita in pursuit of the reformation of the oil industry and to gain more power over the industry issued the Hydrocarbon Laws of 1943. The laws required 50% of the profits generated by the companies to be issued to the state, helping the country regain power over the petroleum industry.[1][5] During that time Venezuela served as a huge producer and supplier of oil to the Allies of World War II, with a 42% increased production from 1943-1944 alone, which grew even more during the following years with the increasing oil demand from the US due to the increase of car usage and production from 1945-1950.[5]
1976 Nationalization
Under the presidency of Carlos Andres Perez, Venezuela officially nationalized its oil industry on January 1st, 1976. With this move, the country assumed control of the chief supplier of foreign oil to the US as well as the largest and most sophisticated petroleum complex in Latin America. The petroleum industry began to be run by Petroleos de Venezuela (PDVSA). Most affected by the takeover were American subsidiaries such as Exxon Corporation, the Gulf Oil Corporation and the Mobil Oil Corporations which had at the time invested more than 5 billion dollars in the industry.[6] The nationalization aimed to assert greater national control over oil resources and revenues, marking a significant shift in the country's energy policy.
Downfall of Venezuela's economy
By the mid 1990s, international oil companies such as Chevron and ConocoPhillips had resumed operations in Venezuela, seeking to develop the country’s large oil reserves.[7] In 1998, Hugo Chávez was elected president and implemented policies aimed at increasing state revenue from the oil industry to support his social programs. These policies included changes in the management of Petróleos de Venezuela, S.A. (PDVSA), which involved the dismissal of many experienced personnel and the appointment of individuals with limited experience in the oil sector.[7] While these initiatives initially reduced poverty and improved literacy rates, they also led to economic challenges. Over-reliance on oil exports, coupled with reduced private investment and economic mismanagement, contributed to a decline in productivity and the onset of economic instability.
Image features Rafael Ramírez, then President of PDVSA, alongside Hugo Chávez, who was serving as the President of Venezuela at the time.
2007 Expropriations
In 2007, the Venezuelan government expropriated the assets of foreign oil companies that declined to restructure their holdings to grant PDVSA majority control. Notably, ExxonMobil and ConocoPhillips resisted these terms, leading to the seizure of their assets. The combination of increased socialist government intervention, the PDVSA strike in 2002, and the expropriation of assets led to a challenging operating environment for U.S. oil companies in Venezuela during the early 2000s. Companies that resisted government-imposed changes faced asset seizures and spent years in legal battles seeking compensation, while those that complied had to operate under less favorable terms.[8]
2015 PDVSA Investigation
In 2015, the US Justice Department initiated an investigation into corruption within PDVSA which uncovered extensive bribery and money laundering schemes involving PDVSA officials and contractors, leading to multiple arrests and convictions, including 12 guilty pleas.[8]
US petroleum sanctions
As the economy worsened and civilian protests increased, specifically during 2014 and 2017, President Donald Trump imposed sanctions that affected Venezuela’s petroleum industry.[9] Firstly, in August 2017, the U.S. government imposed economic sanctions against the petroleum industry by prohibiting the trading of Venezuelan bonds on U.S. markets. Loopholes in the sanctions did permit financing of most commercial trade and humanitarian services to improve the conditions of the Venezuelan people, allowing the United States to protect its financial system from Venezuelan corruption without restricting humanitarian aid.[9]
In January 2019, the U.S. imposed additional sanctions on PDVSA in an effort to pressure President Nicolás Maduro to step down during the 2019 Venezuelan presidential crisis. As a result, Venezuela's economy was estimated to lose more than $11 billion.[9] The sanctions blocked PDVSA from receiving payments for petroleum exports to the U.S., prohibited American companies from exporting naphtha, and froze approximately $7 billion of PDVSA’s U.S.-based assets.[9] Hitting various U.S producers such as Chevron. U.S. and service firms including SLB, Halliburton, Baker Hughes, and Weatherford. However, the U.S treasury department did allow most foreign partners of PDVSA to continue producing and exporting oil to other destinations than the U.S. Later that year, in late 2019, the U.S. asked foreign firms not to send gasoline to Venezuela as part of the U.S. sanctions on PDVSA.
Citgo
Citgo, a U.S based subsidiary of PDVSA, became a focal point in the enforcement of these sanctions. In 2019, the U.S. Treasury Department authorized a board appointed by interim president Juan Guaidó to oversee Citgo, effectively severing the company’s ties with the Maduro administration. This move aimed to prevent the Maduro regime from accessing Citgo's revenues to circumvent sanctions. Despite these measures, Citgo has encountered legal complexities, particularly concerning ownership claims from creditors seeking compensation for Venezuela's defaulted $913 million of defaulted debts.[9][10][11] The USA is trying to move ahead with an auction of shares of Citgo due to disputes from creditors, including holders of defaulted bonds and companies whose assets were expropriated years ago during the presidency of Hugo Chavez.
October 2023
In October 2023, the Joe Biden administration temporarily lifted some U.S sanctions on the oil, gas, and gold industries operating in the country for 6 months. The decision followed the Barbados agreement, the main purpose was the release of political prisoners and a free 2024 election.[9] However, by April 2024, the U.S. government announced the reinstatement of some sanctions. This decision was prompted by the Venezuelan government's failure to fully honor the agreement particularly concerning the disqualification of leading opposition candidate María Corina Machado from participating in the presidential elections.[9] Some companies continued operating in Venezuela due to receiving individual licenses.
February 2025
In February 2025, President Donald Trump announced that he was reversing the authorization that the Biden Administration granted to Chevron Corp. and its subsidiaries as a concession of promoting free elections and human rights reforms in Venezuela.[12] Most importantly, those licenses authorized certain transactions necessary to the production and exportation and importation into the United States by Chevron, its subsidiaries, or joint ventures.[12] Additionally, in March 2025, President Donald Trump issued an executive order that any country purchasing oil directly or indirectly from Venezuela will pay 25% in tariffs on their exports to the United States that would take effect on April 2nd 2025.[13] These measures are expected to heavily impact not only the energy sector, but also financial and other institutions that service the Venezuela energy sector.
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