• Venezuela legally nationalized its oil industry in 1976 with compensation to foreign companies
• Hugo Chávez forced new terms in 2007, leading to billions in unpaid arbitration awards
• International law recognizes Venezuela’s sovereignty over its natural resources

WASHINGTON, DC (TDR) — President Donald Trump declared that Venezuela stole American oil in what he called “the greatest theft in the history of America,” announcing plans to take control of the South American nation’s petroleum industry. The historical reality involves two separate nationalizations spanning five decades, billions in unpaid arbitration awards, and competing interpretations of international law.

Trump’s claims center on Venezuela’s oil reserves, the largest proven deposits in the world at approximately 303 billion barrels. American companies helped develop Venezuela’s oil industry throughout the 20th century before the government systematically assumed control through nationalization policies that began in 1976 and accelerated under President Hugo Chávez in 2007.

The 1976 Nationalization

Venezuela officially nationalized its petroleum industry on January 1, 1976, under President Carlos Andrés Pérez, creating the state-owned company Petróleos de Venezuela (PDVSA). The move followed similar actions by Middle Eastern countries including Libya, Algeria, and Iraq that had successfully claimed state control over their oil resources.

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American subsidiaries including Exxon Corporation, Gulf Oil Corporation, and Mobil Oil Corporations had invested more than $5 billion in Venezuela’s oil infrastructure by 1976. The Venezuelan government offered approximately $1 billion in total compensation to all nationalized oil companies, with Exxon’s Creole subsidiary receiving roughly half that amount.

The compensation reflected net book value rather than the total investments claimed by the oil companies, but the nationalization proceeded without major diplomatic incidents. Historical documents show that President Pérez explicitly asked the United States government to distinguish between American national interests and corporate interests during the transition.

According to declassified State Department cables, Pérez emphasized that Venezuela sought to maintain its relationship as a dependable oil supplier to the United States while asserting sovereign control over natural resources. The 1976 nationalization was conducted under established international law principles recognizing a nation’s permanent sovereignty over its natural resources.

The Chávez Era Confrontation

The second major seizure occurred in 2007 when President Hugo Chávez demanded that foreign oil companies restructure their holdings to give PDVSA majority control. Chávez’s government focused particularly on heavy oil projects in the Orinoco Belt, one of the world’s largest petroleum reserves.

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ExxonMobil and ConocoPhillips rejected the new terms, viewing them as expropriation without fair compensation. Both companies withdrew from Venezuela in June 2007, and Chávez’s government immediately seized their assets including ExxonMobil’s Cerro Negro project and ConocoPhillips’ stakes in Petrozuata, Hamaca, and Gulf of Paria operations.

Chevron Corporation, along with France’s Total and Norway’s Statoil, accepted the revised conditions and remained in Venezuela as minority partners. Chevron continues operating in the country today, producing approximately 25 percent of Venezuela’s total oil output despite years of American sanctions.

International Arbitration Awards

The 2007 expropriations sparked prolonged legal battles in international arbitration courts. The World Bank’s International Centre for Settlement of Investment Disputes ruled in favor of the American companies, awarding substantial compensation that Venezuela has largely refused to pay.

In 2014, an arbitration tribunal ordered Venezuela to pay ExxonMobil $1.6 billion for the Cerro Negro and La Ceiba projects. ExxonMobil had initially sought $12 billion, while Venezuela offered only $353 million. The company has received approximately $255 million to date, leaving more than $1.3 billion unpaid.

ConocoPhillips won an even larger arbitration award totaling approximately $8.7 billion for its three seized projects. An ICSID tribunal ruled in March 2019 that Venezuela’s expropriation was illegal and required full reparation. Venezuela attempted to annul the award but failed when the arbitration committee upheld the original decision in January 2025.

The total amount owed to ConocoPhillips now exceeds $9 billion including legal costs, making it one of the largest investment dispute awards in history. Venezuela has not paid any portion of this judgment, and the South American nation faces more than $60 billion in total claims from various international arbitration cases.

Legal Status Under International Law

Venezuela’s constitution explicitly states that all mineral and hydrocarbon deposits within its territory are “property of the Republic” and “inalienable and not transferable.” Article 12 declares that Venezuelan territory “shall never be assigned, transferred, leased or in any manner whatsoever conveyed, even temporarily or partially, to foreign States.”

International law supports Venezuela’s sovereignty over natural resources within its borders. The principle of permanent sovereignty over natural resources is well-established in multiple United Nations resolutions and international agreements. No arbitration tribunal has contested Venezuela’s ownership of its oil reserves.

However, international law also requires nations to provide fair market value compensation when expropriating foreign-owned assets. The arbitration tribunals ruled that Venezuela failed to meet this standard in 2007, offering only book value rather than fair compensation based on the projects’ actual worth.

Francisco Rodríguez, an economist and founder of Oil for Venezuela think tank, told fact-checkers that claims Venezuela stole American oil reserves would be “laughed out of court” because the oil itself belongs unequivocally to Venezuela under both its constitution and international law.

Infrastructure Collapse Under Maduro

Venezuela’s oil production has collapsed dramatically since Nicolás Maduro succeeded Chávez in 2013. The country currently produces approximately 1 million barrels per day, down from 3.5 million barrels daily before the Socialist revolution and less than half the 2.4 million barrels produced when Maduro took office.

PDVSA acknowledges that its pipelines haven’t been updated in 50 years and estimates that returning to peak production levels would require $58 billion in infrastructure investment. Years of corruption, mismanagement, and American sanctions have left Venezuela’s oil industry in severe disrepair.

Trump emphasized this deterioration in his remarks, stating that oil companies would need to “spend billions of dollars” to “fix the badly broken infrastructure.” Energy analysts estimate that rebuilding Venezuela’s oil sector could cost $10 billion annually and require American companies to play a “quasi-governmental role” for years.

The Compensation Dispute

The core of Trump’s “theft” claim centers on the unpaid arbitration awards rather than Venezuela’s legal right to nationalize its oil industry. American companies argue they are owed more than $10 billion in compensation for assets seized in 2007 without fair payment.

Venezuela counters that it offered compensation based on book value and that the original 1990s contracts allowing foreign investment were themselves unfavorable to Venezuelan interests. President Chávez argued that reclaiming state control over oil wealth was necessary to fund social programs and restore national sovereignty.

The U.S. State Department has consistently maintained that any nationalization should follow international standards including fair market value compensation. However, the American government did not formally protest the 1976 nationalization, which proceeded with negotiated compensation and maintained commercial relationships between the two countries.

Current Legal Battles

As of January 2026, Venezuela’s disputes with ExxonMobil and ConocoPhillips remain unresolved despite arbitration rulings in favor of the American companies. Both firms have sought to enforce their awards by attempting to seize Venezuelan assets abroad, including PDVSA-owned refineries and tankers.

The Trump administration authorized ConocoPhillips to pursue Venezuelan assets worldwide to collect its $9 billion arbitration award. This enforcement effort has included attempts to seize shipments of Venezuelan oil and claims against subsidiary companies operating in other jurisdictions.

Legal experts note that while the arbitration awards are valid under international investment law, collecting judgments from a sovereign nation that refuses to pay presents extraordinary challenges. Venezuela’s economic crisis and international isolation have made enforcement nearly impossible through conventional legal channels.

Can American oil companies rebuild Venezuela’s collapsed petroleum infrastructure while collecting billions in unpaid arbitration awards?

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