US President Donald Trump sparked a controversial debate over who has the right to control Venezuela’s vast oil reserves.
On January 3, 2026, after the US military captured Venezuelan President Nicolás Maduro, the US president declared: “We built Venezuela’s oil industry and now we will take it back.”
On January 6, Trump claimed that Venezuela would provide the United States with up to 50 million barrels of oil in the near future.
The next day, the United States confiscated two oil tankers coming from Venezuela bound for other markets, less than a month after confiscating two others that it claimed were transporting Venezuelan oil.
Long-term plans go much further. Trump predicts that major American oil companies, such as Chevron and ExxonMobil, will invest some $100 billion in reviving the ailing Venezuelan industry, and that the investing companies will be reimbursed through future production. So far, neither Venezuelan authorities nor American oil companies have declared whether they are willing to do so.
As a global energy expert, I believe Trump’s words and actions, including his consultations with oil executives before Maduro’s ouster, indicate a bold push to reassert American dominance in a country with vast oil reserves.
Trump’s justification
Trump’s justification: “Venezuela took our oil, we got it back” apparently refers to the initial nationalization of Venezuela’s oil industry in 1976, as well as a wave of expropriations in 2007 under Venezuelan President Hugo Chávez.
American oil companies played a critical role in launching and sustaining Venezuela’s oil boom, beginning in the 1910s. Companies such as Standard Oil, ExxonMobil’s predecessor, and Gulf Oil, which eventually became part of Chevron, invested heavily in exploration, drilling and infrastructure, transforming Venezuela into a major global supplier.
Contracts of that era often blurred the lines between reserve ownership and production rights. Venezuela legally retained ownership of the subsoil, but granted or sold extensive concessions to foreign operators, such as Royal Dutch-Shell. This, in practice, gave control of reserves and production to the oil companies, but not forever.
This ambiguity likely influenced Trump’s claim of brazen theft through nationalization, a claim that has little basis in the historical precedent of how Venezuela and other nations managed ownership of their natural reserves.
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Oil nationalization
When a country nationalizes its oil industry, control is transferred from private companies, often foreign-owned, to the government.
Nationalization may involve the total expropriation of facilities and reserves, with or without compensation, or the renegotiation of oil production contracts. Alternatively, a government can gain a larger stake in joint ventures it already has with foreign oil companies.
While private oil companies are primarily accountable to their shareholders and primarily focused on maximizing profits, most state-owned oil companies have other priorities as well. These could include injecting revenue into social protection programs, national energy security, the development of other industries and military spending.
Sometimes these other objectives divert so much money from the oil company’s orbit that they interfere with operational efficiency and reinvestment, slowing growth or even reducing production capacity. This is what happened in Venezuela, where oil production has fallen dramatically since 2002.
But other Latin American countries also nationalized their oil industries with better results.
The experience of Mexico
In Mexico, President Lázaro Cárdenas’s expropriation of foreign oil assets in 1938, primarily from American and British companies, was the region’s first assertion of economic independence.
Amid labor disputes and a perception of exploitation, 17 private companies were nationalized, creating Petróleos Mexicanos as Mexico’s state oil monopoly. Mexicans celebrate the formation of this company, known as Pemex, every March 18 as a symbol of national sovereignty.
Despite initial boycotts and diplomatic tensions, Mexico eventually compensated foreign companies that lost their properties. However, it isolated its oil sector from international capital and technology for decades.
Due to the depletion of Pemex’s largest oil fields, chronic underinvestment, lack of adoption of new technologies, and reckless political decisions, production, which peaked at 3.8 million barrels per day in 2004, began to decline. Mexico responded in 2013 and 2014 with reforms that opened the oil, gas and power generation industries to private capital.
By 2018, political backlash around perceived loss of sovereignty and inequality in benefits led to a policy shift. Oil production continues to decline; It currently stands at 1.8 million barrels per day.
Mexico’s experience underscores how oil nationalization can foster self-sufficiency while hampering production.
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Brazil’s approach
Brazil also nationalized its oil industry in 1953, when President Getúlio Vargas established Petróleo Brasileiro SA as a state company.
From the beginning, Petrobras monopolized all Brazilian oil exploration and production. The government expanded the company’s reach by nationalizing all private refineries in 1964.
The nationalization of Brazil’s oil was part of a broader effort by the country to develop its own industrial capacity and reduce its dependence on foreign oil.
Petrobras has changed significantly since its founding, especially after President Fernando Henrique Cardoso signed the oil deregulation law in 1997. It is currently a state company, in which investors can buy and sell shares. The government has forged numerous alliances with private oil companies, attracting foreign investment.
This strategy was successful. Production has quadrupled, going from 0.8 million barrels per day in 1997 to 3.4 million in 2024.
Shell, Total Energies, Equinor, ExxonMobil and other foreign oil companies have contributed capital, technology and execution capacity, especially in deepwater drilling.
The nationalization of Venezuela
In contrast, the Venezuelan oil nationalization went from cooperation with foreign oil companies to confrontation with them.
President Carlos Andrés Pérez first nationalized the Venezuelan oil industry in 1976, creating Petróleos de Venezuela, S.A. Foreign companies received compensation close to 25% for the loss of their assets. Many became service providers or formed joint ventures with the new company, PDVSA.
Venezuela opened its oil sector to foreign capital in the 1990s. At the time, it sought to increase production and develop the Orinoco Belt in eastern Venezuela, which is home to some of the largest oil reserves in the world.
This policy contributed to Venezuelan production reaching a historical maximum of more than 3 million barrels per day in 2002.
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The situation worsens with Maduro.
Venezuelan oil production declined further during Maduro’s presidency, falling to 665,000 barrels per day in 2021. Production has since recovered slightly, reaching approximately 1.1 million barrels per day by the end of 2025, about a third of its all-time high.
This overall decline is due to mismanagement, corruption, and more than a decade of US sanctions. Deteriorating infrastructure – leaking pipelines, aging refineries kept running by makeshift repairs – has exacerbated this crisis.
Many obstacles impede the industry’s recovery, including current and potentially future legal disputes, geopolitical risks and the need for massive investments. Returning Venezuela’s oil production to its maximum of 3 million barrels a day could cost more than $180 billion.
best example
As Brazil’s experience suggests, government control over the production and sale of oil is not inherently detrimental to a country’s economic well-being.
Norway is an even stronger example. The oil-rich Nordic country sidestepped what some academics call the “resource curse” by seeing the oil its national company, now called Equinor, has produced as a source of lasting wealth for the Norwegian people.
Proceeds from the Norwegian government’s 67% stake in Equinor were accumulated in a sovereign wealth fund worth more than $2 trillion, helping Norway diversify its economy.
As the Venezuelan government reorganizes following Maduro’s ouster, it can learn a lot from other countries that have managed to maintain greater stability alongside state-controlled oil production.
*Skip York is a non-resident fellow in Global Energy and Petroleum at the Baker Institute for Public Policy at Rice University.
This text was originally published in The Conversation
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