Venezuela: Navigating a New Era of Uncertainty

After months of escalating pressure, U.S. military and law enforcement personnel captured Venezuela's disputed ruler, Nicolás Maduro, in a nighttime raid on January 3, 2026. Hours later, with Maduro en route to face federal narcotrafficking charges in New York, President Donald Trump promised that U.S. oil and gas companies would soon return to Venezuela to invest in the country's deteriorating infrastructure and indicated that the move could usher in significant business opportunities for U.S. energy companies.

Background

Venezuela holds the world's largest proven oil reserves – approximately 303 billion barrels, representing roughly 17 percent of global reserves, according to the U.S. Energy Information Administration. The country was once among the world's leading oil exporters and is a founding member of OPEC. However, production has declined significantly from its peak of approximately 3.5 million barrels per day in the late 1990s to current levels of roughly 800,000 to 1.1 million barrels per day. After decades of nationalization, underinvestment and mismanagement, Venezuela's oil and gas infrastructure has deteriorated significantly. Any effort to increase production will require systematic and sustained capital commitments from U.S. and international oil and gas companies and oilfield service providers, as well as access to equipment and supplies that have been restricted by years of sanctions.

Investments by U.S. oil and gas companies and other businesses will require powerful incentives given the time and resources required to develop and modernize Venezuela's oil and gas extraction and refining capabilities and open questions surrounding the future of Venezuela's political system. Events over the next few weeks will impact energy markets, investors, companies engaged in protracted litigation regarding Venezuela's 2007 expropriation of assets and the Venezuelan people who have shouldered the burden of Maduro's policies.

The operation to oust Maduro is the most recent example of the administration's strategic focus on stabilizing and securing the Western Hemisphere – a "Trump Corollary" to the Monroe Doctrine designed to discourage mass migration to the U.S., combat cross-border narcotics trafficking and undercut the interests of U.S. adversaries such as China, Iran and Cuba, all of which have significant economic interests in Venezuela. In the near term, regional players such as Cuba, Curaçao and Trinidad could face interruptions in their oil supply, and U.S. policymakers must reckon with the glut of Venezuelan crude oil currently at sea in blocked tankers.

Several key issues should inform whether, when and how U.S. businesses enter (or re-enter) or expand operations in Venezuela.

Sanctions Relief

U.S. policymakers must strike the right balance between providing reliable sanctions relief for U.S. companies and maintaining leverage as Washington pushes Venezuelan authorities in the capital city of Caracas to reform and, ultimately, transition back to a free-market democracy. This will be a difficult task given that U.S. companies will be reluctant to rely on narrowly scoped sanctions relief, and removing sanctions altogether would dilute America's leverage over the Venezuelan regime.

Critically, the U.S. must figure out what to do with the Venezuelan crude sitting idle on tankers due to the recent blockade, which cratered Venezuelan exports. One option is to seize the oil currently at sea pursuant to existing authorizations for official business of the U.S. government, then initiate forfeiture proceedings before a U.S. court to terminate any sanctionable interest. On January 7, 2026, U.S. forces seized two oil tankers, including one that recently started flying a Russian flag.

U.S. Department of Energy (DOE) Secretary Chris Wright has also indicated that the U.S. would sell the country's oil "indefinitely." Secretary Wright's comments followed President Trump's January 6 announcement that Venezuela's interim authorities would soon turn over between 30 million and 50 million barrels of sanctioned oil to the U.S. In a fact sheet published on January 7, 2026, the DOE indicated that the U.S. government is "selectively rolling back" sanctions to enable the transport and sale of Venezuelan crude and oil products to global markets. This presumably includes authorizations to allow U.S. diluent into Venezuela, which is necessary to optimize the production and transport of Venezuela's heavy crude oil, and for the import of certain oilfield equipment, parts and services. The DOE indicated that the U.S. government has "engaged the world's leading commodity marketers and key banks" to execute and provide financial support for sales of Venezuelan crude oil in the global marketplace "for the benefit of the United States, Venezuela, and our allies."

U.S. administration officials have suggested that the oil will be sold at market prices, with proceeds held in U.S. banks until the administration determines Venezuela is "ready" to receive the funds.

Because the Venezuela sanctions were imposed by executive action, not legislation, they can be licensed, suspended or revoked by the president at any time, unlike the Syria sanctions removed in 2025, which had been mandated in part by the U.S. Congress. The U.S. may move forward with a staggered approach to sanctions relief following its approach to Syria by issuing a broad general license for transactions and activities on the ground, followed by the revocation of certain executive orders and the contemporaneous "redesignation" of Maduro and his supporters under a new and targeted authority. Counterterrorism sanctions imposed on Cartel de los Soles and Tren de Aragua are likely to remain in place.

As the Syria experience illustrated, however, even with sanctions relief, financial institutions, insurers and other companies may remain leery of reengaging in the country until the political and economic situation has stabilized and sanctions have been permanently removed. U.S. businesses are likely to be even more wary of investing in Venezuela given the history of the U.S. offering, then revoking sanctions authorizations.

Other Incentives

The Trump Administration has signaled its expectation that U.S. oil companies will invest in rebuilding Venezuela's oil and gas infrastructure. U.S. Secretary of the Interior Doug Burgum and Energy Secretary Wright have been tasked with engaging American energy companies about potential opportunities in Venezuela. According to recent reports, the administration is organizing meetings with U.S. oil and gas executives as early as this week to discuss plans for rebuilding Venezuelan oil and gas infrastructure. To attract meaningful investment, the Administration will likely need to offer significant incentives or protections for investors, which may include guarantees of payment of awards due under various arbitration proceedings, investment protections or other support for the industry.

The Trump Administration recently indicated that energy companies may be expected to invest significant capital in rebuilding Venezuela's oil and gas infrastructure as a prerequisite to recovering billions of dollars in outstanding claims against the Venezuelan government arising from the 2007 expropriations, though details remain unclear.

Whether and how a framework for foreign investment protection will be created to give U.S. companies security if they invest in Venezuela is another open question. Venezuela is not currently a party to any bilateral investment treaties (BITs) or free trade agreements (FTAs) with investment chapters with the U.S. These would typically establish, among other things, procedures and venues (e.g., international arbitration) for investors to address cross-border disputes, provide for compensation in the event of expropriation by the host state, guarantee of fair and equitable treatment for foreign investors and their investments, and provide for full protection and security of qualifying foreign investments.

The administration's game plan for affording investors these types of protections remains to be seen. If such assurances are provided, this could help incentivize significant investment by U.S. companies in Venezuela. It is possible that the Trump Administration could seek to enter into a new bilateral investment treaty with Venezuela's government that would establish such protections formally and with robust enforcement mechanisms. The administration might instead establish a specialized U.S. government-administered mechanism for handling and processing claims in an effort to reassure and incentivize U.S. investors. The U.S. Foreign Claims Settlement Commission (FCSC), an agency within the U.S. Department of Justice (DOJ), previously played a role in adjudicating claims of U.S. nationals against foreign governments such as Cuba, Libya, Hungary and Czechoslovakia. This commission could ultimately be asked to address outstanding claims against the Venezuela's government as well, although it would need to be granted jurisdiction to do so either by Congress or under an international agreement.

Notably, recent and future actions by the Venezuelan government could give rise to claims from foreign investors from other countries that have their own BITs with Venezuela, including China. This could further complicate the investment environment for U.S. businesses.

Market and Industry Conditions

Even though the administration may seek to provide sanctions relief, incentives and protections to U.S. businesses and investors, initial industry response has been cautious. Several additional factors appear to be contributing to this measured approach:

• Political and Security Uncertainty. The political situation in Venezuela remains fluid, with questions about governmental authority and long-term stability. The safety of personnel and security of equipment remain an initial focus for industry participants.
• Market Conditions. Global oil prices are currently low, and U.S. oil and gas companies are closely guarding capital for investments even in mature, stable fields in the U.S. and other areas of growth in South America, such as Guyana.
• Infrastructure Requirements. Restoring Venezuela's production to historic levels of 3 million to 4 million barrels per day could require substantial and sustained investment over many years, including an aggressive inspection and repair program for wellheads, production systems and pipelines.
• Contractual and Legal Considerations. Companies will need clarity on the terms under which they would operate, viability and enforceability of contracts, and status of existing arbitration awards and outstanding debts owed by PdVSA.
• Prior Expropriation Experience. U.S. oil companies have not forgotten the 2007 nationalizations. Companies that hold outstanding arbitration awards may be reluctant to reinvest absent clear legal protections and assurances regarding prior claims.

Chevron is currently the only major U.S. oil company with significant operations in Venezuela. Other majors, including ExxonMobil and ConocoPhillips, exited the country following the 2007 expropriations and have indicated they are monitoring developments but have not committed to new investments.

Holland & Knight stands at the forefront of advising clients through this pivotal moment for Venezuela. Our Venezuela Strategic Advisory Team is specifically designed to support clients navigating the country's evolving political and economic landscape while also providing informed guidance on emerging business opportunities. With a strong regional presence, deep relationships and multidisciplinary legal and policy capabilities, bolstered by our long-standing relationship with Caracas-based law firm Tinoco, Travieso, Planchart & Núñez, we serve as a trusted partner to businesses operating in, entering or affected by developments in Venezuela.

As the situation continues to unfold, Holland & Knight is committed to helping clients move forward with clarity, agility and confidence. For more information, or to discuss how these developments may affect your organization, please contact any of the authors of this alert or your regular Holland & Knight representative.