In 1976, the government of oil-rich Venezuela assumed control of the country’s petroleum industry, nationalizing hundreds of private businesses and foreign-owned assets, including projects operated by the American giant ExxonMobil.
In 2007, Hugo Chávez, the founder of Venezuela’s socialist state, assumed control of the last privately run oil operations in the Orinoco belt, home to the country’s largest oil deposits.
President Donald Trump said this week that the expropriation of American oil company assets justified a “total and complete blockade” of oil tankers arriving and leaving Venezuela in defiance of U.S. sanctions. The blockade will remain, he wrote on Truth Social, until the South American nation returns “to the United States of America all of the Oil, Land, and other Assets that they previously stole from us.”
“They’re not going to do that again,” Trump told reporters. “We had a lot of oil there. As you know they threw our companies out, and we want it back.”
But U.S. companies never owned oil or land in Venezuela, home to the world’s largest proven reserves of crude, and officials didn’t kick them out of the country.
“Trump’s claim that Venezuela has stolen oil and land from the U.S. is baseless,” said Francisco Rodríguez, a Venezuelan economist at the University of Denver.
Nationalization was the culmination of a decades-long effort by administrations of both the right and the left to bring under government control an industry that an earlier leader had largely given away.
The right-wing strongman Juan Vicente Gómez, the military dictator who ruled Venezuela from 1908 until his death in 1935, granted concessions that left three foreign oil companies in control of 98 percent of the Venezuelan market. The country became the world’s second-largest oil producer and largest exporter; oil accounted for over 90 percent of the country’s total exports.
Gómez’s successors tried to seize greater control over the country’s economy. Under President Isaías Medina Angarita, authorities approved a law in 1943 that required foreign oil companies to relinquish half their profits to the government. A 1958 pact signed by Democratic Action, the Democratic Republican Union and the Independent Political Electoral Organization Committee ensured the country’s major political parties had access to oil profits.
By the time Venezuelan lawmakers began debating nationalization legislation in 1975, Rodríguez said, the “writing was on the wall.”
“Nobody was going to resist Venezuela carrying this nationalization to its end, and the U.S. was much more interested in having Venezuela be a provider of oil — relatively cheap oil — than to have a production collapse in Venezuela,” Rodríguez said. The change, consequently, was “relatively uncontroversial.”
President Carlos Andrés Pérez, a democratic socialist, signed the bill into law that August. In January 1976, Venezuelan state oil company Petróleos de Venezuela S.A. took over the exploration, production, refining and export of oil.
The country followed Mexico, Brazil and Saudi Arabia in a wave of resource nationalism aimed at trying to wrest control of energy resources, primarily from the United States, to achieve economic sovereignty.
American oil companies, including Exxon and Mobil, which merged in 1999, and Gulf Oil, which became Chevron in 1984, were hit hardest. The Dutch giant Shell was also affected. The companies, which had accounted for more than 70 percent of crude oil production in Venezuela, lost roughly $5 billion in assets but were compensated just $1 billion each, according to news reports from that period.
But they didn’t seek larger sums, Rodríguez said, and “felt that it didn’t make sense to press it more.” They also lacked “a mechanism that would have allowed the companies in 1976 to actually take these cases to court.”
(A 1991 bilateral investment treaty between Venezuela and the Netherlands created a legal pathway for investors to sue a foreign government for unfair treatment. Cases go before private arbitration panels rather than courts.)
In January 2007, Chávez called for the nationalization of the natural gas industry — part of his plan to redistribute oil wealth and transform the poverty-stricken nation into a socialist state.
When PDVSA assumed control of oil operations in Venezuela’s Orinoco Belt, ExxonMobil and ConocoPhillips were unable to agree to new contract terms and sought up to $40 billion in compensation through arbitration.
Several oil companies, including Chevron and Spanish-owned Repsol, remained in Venezuela under new contract terms. Chevron is the only American company still operating there.
In 2012, the International Chamber of Commerce awarded ExxonMobil $908 million in compensation, less than the $1 billion that Venezuela had offered. The tribunal awarded ConocoPhillips $2 billion in 2018. The World Bank’s International Center for Settlement of Investment Disputes awarded ExxonMobil $1.6 billion in 2014 and ConocoPhillips $8.7 billion in 2019.
Venezuela has yet to pay the full amounts. The economy is struggling under hyperinflation, government corruption and U.S. sanctions. Under Chávez’s successor, Nicolás Maduro, oil exports, once 3 to 4 million barrels a day, are now estimated at no more than 900,000 barrels per day. Most of it goes to China.
The Trump administration has accused Maduro of using oil money to fund drug trafficking and other crimes. Maduro has said the claim amounts to “warmongering.”
“American sweat, ingenuity and toil created the oil industry in Venezuela,” Stephen Miller, Trump’s White House deputy chief of staff and homeland security adviser, wrote in a post on X. “Its tyrannical expropriation was the largest recorded theft of American wealth and property.”
Rodríguez said the administration’s position “just doesn’t have any logic.”
“It’s kind of like an odd argument,” he said. “You owe me some money. We both went to court. The court said, ‘You pay me this.’ You start paying me, then I — by force, by the imposition of sanctions — make it impossible for you to continue paying me, and then I accuse you of stealing something from me.”
U.S. forces on Dec. 10 seized the Skipper, a fully loaded oil tanker, operating under a false Guyanese flag and already under U.S. sanctions, after it departed Venezuela en route to Asia. U.S. forces intercepted another vessel on Saturday.
Neil Atkinson, a former head of oil at the International Energy Agency, said the blockade, if maintained, would cripple the Venezuelan government’s finances because it’s so dependent on revenue generated by oil exports.
Over the short term, the implications for Venezuela are “very, very serious,” he said. “Over time the impact is disastrous.”
By his estimate, the country relies on no more than a handful of tankers each day to export its oil to overseas buyers. A blockade of 30 such tankers, he said, could have a crippling impact.
Trump’s blockade applies only to the so-called dark fleet of tankers on which he has imposed sanctions, most of them for carrying sanctioned Iranian oil under false registrations. It is unclear how many of those, such as the Skipper, also are used by Venezuela and might be stopped.
But the blockade is unlikely to have a significant impact on the global oil market, Atkinson said, because supply is currently outstripping demand. “If you’re going to disrupt the Venezuelan oil industry,” he said, “this is the time to do it without having any adverse impact on global oil prices.”
Even for China, the world’s largest consumer of Venezuelan oil, the impact would be negligible. Venezuelan oil makes up only a small fraction of its total imports.
“The Chinese are nothing if not realists,” Atkinson said. “Those barrels can be replaced.”
Karen DeYoung and Samantha Schmidt contributed to this report.
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