Andean Group - January 2026

Celebrations were largely absent in the streets of Caracas after the dramatic US raid to arrest former president Nicolás Maduro (2013-2026) on drug and weapons charges on 3 January. Uncertainty mounted further after President Donald Trump’s administration made clear its intention to steer Venezuela and its all-important oil sector, while making little mention of any plan for a democratic transition. Trump’s pledge to “run” the country did little to reassure Venezuelans, or many investors for that matter, that life there would be safer and more prosperous any time soon.

The list of questions that continues to cloud the country’s prospects after the spectacular US military operation is enormous. What has actually changed in Venezuela, if the leader of the Chavista regime was removed, but the entire apparatus that has governed for more than a quarter of a century remains in place? How long can such an arrangement last? Who will dictate economic policy? What is the risk of leftist militants or corrupt generals rebelling against Washington’s directives? More broadly, how will Venezuelans feel about the US taking control of their oil?

“If the [Trump] administration is really seeking significant policy changes from Venezuela, can it get those from institutions that are still run in the country by Maduro’s handpicked successors?” asked Caitlin Talmadge, a fellow at the Brookings Institute, a US think tank. “And if it can’t, then what is it going to do?”

New President Delcy Rodríguez, who had served as Maduro’s vice president since 2018, is considered to be more pragmatic and less ideological than Maduro. But Rodríguez will have to perform a highwire balancing act between the Trump administration on the one hand, and the military and the leadership of the ruling Partido Socialista Unido de Venezuela (PSUV) on the other hand. While Trump claimed he would have full control in Venezuela, and US Energy Secretary Chris Wright said relations with Venezuelan authorities were “fantastic”, the public messaging from Rodríguez told a different tale. “There is no external agent governing Venezuela,” she declared on 6 January.  “We are here governing alongside the people, and no one else.”

The Rodríguez government has agreed to US demands for the release of large numbers of political prisoners, releasing a confirmed 102 of these as of 15 January but so far keeping leading opposition campaigners behind bars – probably due to concerns that they could launch street protests calling for immediate elections. At the same time, Rodríguez has continued to condemn Maduro’s detention. “We will not rest until we have President Maduro back; we are going to rescue him,” she said.

Vast potential, enormous challenges

On paper Venezuela is one of the richest countries in the world. It harbours the world’s largest proven reserves of crude oil – an estimated 303bn barrels, or 17% of global reserves, according to the US Energy Information Administration (EIA). Multiplied by the current price of US$51 per barrel for the country’s flagship Merey crude, that translates into a potential US$15.5tn waiting to be tapped. At the same time, Venezuela’s current output accounted for only 0.8% of global production in 2023, according to the EIA, meaning there is huge potential for growth.

So far, though, oil companies have not been rushing forward. Enthusiasm is dampened by memories of past nationalisations and ongoing political risk, with uncertainty surrounding governance, the need for massive investment in oil infrastructure and the electricity grid, the possibility of renewed internal disruptions, and shifting US policy all complicating the outlook.

ConocoPhillips and Exxon are two of the three US oil companies considered to be best placed to drive a Venezuelan oil renaissance. Both have operated there before, but their operations were expropriated as part of the second nationalisation of the industry in 2007. Chevron, which continues to operate in Venezuela under special licence by the US government, is the other oil major the Trump administration is betting on to massively crank up oil output there.

Exxon’s CEO, Darren Woods, summed up his concerns over regulatory, contractual, and legislative issues during a meeting between oil executives and Trump on 9 January. “If we look at the legal and commercial constructs and frameworks in place today in Venezuela, it’s uninvestable,” Woods said, saying that as a prerequisite he would want to see reforms to the country’s legal system and hydrocarbons law, as well as investment protection measures. The CEO of ConocoPhillips, Ryan Lance, said the oil company was the largest private creditor in Venezuela due to the 2007 expropriation and called for a restructuring of the debt and the country’s energy sector, including state oil firm Petróleos de Venezuela (Pdvsa).

Indeed, a lasting debt restructuring is widely seen as a necessary precondition for committing new capital to the energy sector. In fact, tackling Venezuela’s enormous debt burden is a prerequisite for restoring macroeconomic stability and paving the way for broader economic growth. But allowing the country to tap global financial markets and raise funds it needs to grow will depend on one of the world’s most complex debt restructurings. The sheer scale of Venezuela’s obligations – they represent one of the largest sovereign debt defaults on record – complicates the process. Venezuela’s outstanding debts are estimated to exceed U$150bn, spread across a tangled web of government bonds, Pdvsa liabilities, bilateral loans, and arbitration claims.

The lack of transparency in Venezuela and the number of stakeholders, combined with US sanctions, mean progress will be slow and fraught. Investors obviously want to recover as much as possible from their original investment. At the same time, oil production has fallen to less than a third of its historical peak of over 3m barrels per day (bpd), leaving the state with limited revenue to service debt, finance huge infrastructure investments, or bankroll basic public services such as power, water, or education. Even if the issues of defaulted debt and political uncertainty could be solved, there is a broad consensus that it would take about a decade and huge investments (US$100bn was the figure floated by Trump) to get the oil industry back on its feet.

A lack of investment and maintenance, corruption, and a strained electricity grid that suffers regular power outages, have caused oil production to plummet from 3.1m bpd in 1998, the year before Maduro’s predecessor Hugo Chávez (1999-2013) took office, to about 930,000 bpd in November 2025. There are reports that oil rigs in the Orinoco Belt, which holds the largest reserves of Venezuela’s heavy crude, have been partially abandoned and ransacked for scrap metal, and that heavily degraded port infrastructure is causing serious delays to ship loading times. And critically, upgraders that convert the country’s heavy crude into higher grade oil have all but broken down. According to the Center for Strategic and International Studies (CSIS), only one of the country’s four upgrading facilities is operational.

To make matters worse, the US blockade of sanctioned oil tankers entering and leaving Venezuela caused oil exports in December to plummet to about half of the 950,000 bpd registered in November, according to Reuters. Since the blockade, a few ships have arrived in Venezuelan waters, but many have turned back. Limited storage and restrictions on its ability to ship crude abroad forced Pdvsa to begin shutting down oil wells in the Orinoco Belt on 28 December, Bloomberg reported.

Interrupting oil production is very costly and often technically challenging. Cooling downhole pumps can become clogged, altered pressure dynamics or water accumulation can complicate a restart, and machinery must be stored or face decay. Well output sometimes never recovers fully, meaning the blockade could inflict lasting damage on Venezuela’s main economic activity.

Provided that security for additional foreign oil companies can be ensured and solid legal and tax arrangements could be worked out, there is some low-hanging fruit that US oil services companies could help harvest with proper management and upgrades to existing wells, according to Clay Seigel, an energy and geopolitics expert at CSIS. US Energy Secretary Wright said that with the help of the US government, Chevron sees “a pathway to grow their production by 50% in the next 18-24 months”. Most sources put Chevron’s current production in Venezuela at about 150,000 bpd.

But even smaller scale operations require a minimum of security, which itself is still an open question. A day after Trump assured oil executives that the Rodríguez administration would keep their employees safe if they deployed to Venezuela, his government issued a security advisory warning of armed militia groups “setting up roadblocks and searching vehicles for evidence of US citizenship or support for the United States.” What comes to mind is the potential for kidnappings of expats by guerilla forces, which were commonplace in neighbouring Colombia in the late 1990s and early 2000s.

Economic hardship

Years of political turmoil have already taken their toll on the Venezuelan people, and it is possible that things will get worse before they get better. The potential is huge for Venezuelans to be disappointed by a partial regime change in which they had no say and which may not benefit them in the short-term.

Even before the US began a blockade in December on all sanctioned oil shipments in and out of the country, Venezuela’s economy was deteriorating fast. With fewer and fewer dollars entering the economy, the local currency plummeted. At the beginning of 2025 one dollar was worth 52 bolívares. At the end of the same year, it bought 301 bolívares at the official exchange rate. On the black market you had to pay 520 bolívares to buy one greenback.

That massive currency depreciation has refueled inflation, as the price for imported goods became more expensive. The central bank has not updated its official inflation data since October 2024, and amid an intensifying climate of censorship in recent years, the economic think tank Observatorio Venezolano de Finanzas (OVF) has not published its own inflation estimate since March 2025, when it put annual inflation at 136%.

Debate begins on hydrocarbon law reform

On 22 January Venezuelan lawmakers began debating a bill to reform the country’s hydrocarbon law – a key demand of the Trump administration. As the debate began there was scant detail on the contents of the bill. This lack of transparency sparked criticism from the small contingent of opposition lawmakers in the national assembly, led by Henrique Capriles Radonski, who said on 21 January that with less than 24 hours before the debate began, they had still not seen the bill. National assembly president Jorge Rodríguez – the brother of President Rodríguez – said that the reform was aimed at boosting foreign investment in the oil sector.