Venezuela Outlook: Oil and Gas on the Horizon?

The U.S. capture of Venezuelan President Nicolás Maduro on January 4, 2026, represents the most significant American military intervention in Latin America since Panama in 1989. While the Trump administration has committed to “running Venezuela” until legitimate elections can be held, the path to restoring oil production and attracting foreign investment faces substantial obstacles that will likely take years, not months, to overcome.

Political Transition: Interim President Delcy Rodríguez has shifted from defiance to diplomacy, with the Trump administration exploring a bilateral investment treaty (BIT) to protect U.S. oil majors (Chevron, ConocoPhillips, and ExxonMobil) from future expropriation. However, opposition leaders María Corina Machado and Edmundo González Urrutia remain sidelined as Washington assumes direct administrative control.

Regime Remnants: Maduro’s capture doesn’t mean his apparatus is dismantled. Key figures including Interior Minister Diosdado Cabello Rondón and Defense Minister Vladimir Padrino López remain at large, along with tens of thousands of armed pro-government militias (colectivos), creating potential counterinsurgency risks.

Current State: Venezuela’s oil production has plummeted from 3.5 million barrels per day (bpd) in the late 1990s to below 900,000 bpd today, driven by a combination of sanctions, corruption, mismanagement, and infrastructure decay.

Near-Term Potential: Chevron could potentially add 100,000-300,000 bpd within two years through existing field rehabilitation—far short of transformational supply increases.

• Infrastructure decay: Severely degraded pipeline networks, terminals, and processing facilities, requiring billions in investment
• Brain drain: PDVSA (the state-owned oil and gas company) has lost experienced operators and institutional knowledge
• Heavy crude challenges: Requires specialized diluent (previously from Iran/Russia) and consistent water handling
• Power grid instability: Hampers energy-intensive processing operations
• Refinery capacity: Key facilities like Curaçao’s Isla refinery (mothballed since 2019) need $1 billion just to reopen at 200,000-300,000 bpd capacity
• Existing debt: $150 billion in obligations to Western creditors plus debt-for-oil agreements with China and Russia limit available barrels

A robust BIT could address historical expropriation concerns through:

• Pre-funded compensation: Escrow accounts in neutral jurisdictions
• Real-time monitoring: Sophisticated asset tracking technology
• Graduated response framework: Automatic escalation from diplomatic intervention to financial sanctions

However, existing risk mitigation institutions (e.g., DFC, MIGA, and Export-Import Bank) lack sufficient capacity to support Venezuela’s oil sector reconstruction without dramatic Congressional expansion—politically challenging and requiring funding comparable to Iraq’s reconstruction effort.

• Russia: Loses $9 billion in Rosneft investments and a strategic foothold cultivated over two decades
• China: Faces potential loss of over $60 billion in loans-for-oil arrangements, raising concerns about precedent for regime change operations
• Iran: Loses sanctions-evasion partner; Venezuelan tanker networks that supported Iranian oil exports face immediate disruption
• Cuba: Faces most immediate damage with the loss of 50,000-80,000 bpd in preferential oil shipments—the most significant blow since the Soviet collapse

Despite the headlines, our analysts urge restraint:

• Venezuela’s expropriation history demonstrates an unreliable partnership for foreign investment
• No precedent exists for comprehensive U.S. government rebuilding efforts outside of Iraq post-2003
• Political support for Venezuelan intervention lacks broad backing, making sustained commitment uncertain
• Rushing back into the country signals American companies will invest anywhere after regime change, increasing host-country leverage and corporate reputational risk
• Stabilization costs will compete with core defense priorities, requiring supplemental Congressional appropriations

While Trump’s confident statements suggest rapid progress, the reality is that improvements will be “slower to move than headlines.” Even with immediate sanctions relief and a bilateral investment treaty, Venezuela’s return as a major oil producer faces multi-year infrastructure, security, and political challenges that cannot be solved through diplomatic agreements alone.

Washington Analysis (“WA”) conducts economic, political, legislative, legal, and regulatory analysis. This document is for informational purposes only and provided on an as-is basis without any representation or warranty as to the accuracy, completeness, timeliness or availability of the information herein. This document is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or advice to engage in any investment activity. Statements made herein are not directed to any particular investor or type of investor, and do not take into account any investor’s particular investment objectives, financial situations or needs. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Washington Analysis disclaims all liability arising from reliance on this information for investment or other purposes. Directors and/or employees of Washington Analysis may own securities, options or other financial instruments of the issuers discussed herein, however analysts do not receive any compensation in exchange for any specific recommendation or view expressed herein. © 2026, Washington Analysis LLC, a CFRA Business. All rights reserved.