Despite the political dynamics following the January 3rd detention of Nicolás Maduro, which was intended to make a path for a wholesale takeover of Venezuela’s energy sector, the US oil industry remains hesitant. American oil elites, whose support was anticipated to be a cornerstone of any Venezuela plan, are skeptical about the administration’s push to make the venture feasible. Their reluctance stems from an assessment of the difficulty, risks and costs involved in redeveloping Venezuela’s oil industry.

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The United States, despite leveraging sanctions as its primary tool to weaken Venezuela and influence political change, has not articulated a clear or integrated plan for the country’s oil industry. While lifting broad economic sanctions would be a necessary first step toward any serious rehabilitation—unlocking access to international finance, technology, and markets—but such a move remains today rhetorical deceive rather than a reality.

Moreover, Venezuela possesses vast reserves of heavy, sour crude that is expensive and technically difficult to extract and refine. Decades of economic sabotage, compounded by years of sanctions that choked off investment and spare parts, have left the infrastructure in a state of near-total collapse. Mere rhetoric about the sector’s potential does not constitute a strategy for its multi-billion-dollar, decade-long reconstruction.

If a straightforward and profitable path existed to rapidly revive Venezuela’s oil industry, China—with its immense capital, technology and vested interest—would have already succeeded. The fact that it has not done so shows the profound, structural nature of the crisis. It shows that the primary obstacles are not merely political ideology or US sanctions, but deep-seated institutional failures that even the most motivated external actor cannot easily overcome.

China possesses immense financial capacity, having extended over $60 billion in loans to Venezuela through its Belt and Road initiative. Its national oil companies, like CNPC and Sinopec, have deep technical expertise in complex, heavy oil projects similar to those in Venezuela’s Orinoco Belt. Furthermore, China has demonstrated the logistical and engineering know-how to execute massive infrastructure projects across the globe. Despite this unique combination of capital, technology, and experience, Chinese firms have been unwilling to catalyze a turnaround in Venezuela.

And instead, China’s strategy has primarily been one of “debt-for-oil,” committing over $60 billion in loans secured by future shipments rather than taking direct operational control of fields and operations. Chinese national oil companies, facing unpaid bills, operational problems, and extreme risk, have focused on recouping existing debt rather than funding a wholesale revival.

The physical and human capital required for a turnaround is equally daunting as the decades of economic sanctions war, underinvestment and mismanagement have left infrastructure in a state of profound decay. Rebuilding requires not just capital, but a functioning ecosystem of skilled labor, security, stable partners, and a reliable legal framework, all of which are in short supply. And continued US sanctions further complicate access to vital technology and financing, adding cost and legal risk to any major project.

Even with a theoretical pro US government in Caracas – which is not something we know exists as of yet with Delcy Rodriguez – the sector is viewed as structurally uninvestable for the foreseeable future. Long years of catastrophic mismanagement, asset stripping, and deferred maintenance have left physical infrastructure in ruins, while a culture of corruption and legal opacity remains deeply rooted. The future political volatility and the threat that contractual agreements or property rights could be reversed by a subsequent government create an insurmountable barrier. For US firms, the required investment — tens of billions of dollars over a decade with no guarantee of stability or return — is simply too great. They see far safer and more profitable opportunities elsewhere, from the US shale patch to other global basins, making the takeover of Venezuela’s broken oil industry a dangerous gamble they are unwilling to take.

However, the Chinese experience proves otherwise as it demonstrates that no single external factor can bypass Venezuela’s political and economic collapse so easily even more so with sanctions still ongoing. Any future recovery will be slow, more expensive, and far more contingent on internal stability than Trump’s optimistic forecasts suggest.

Will the US Just Sit on the Oil?

This apparent lack of a coherent redevelopment plan has led many observers to question whether the US even has a strategy in fully reviving Venezuelan production. As a resurgent Venezuelan oil industry would, over time, introduce significant new volumes of crude onto the global market, acting as a direct competitor to US shale exports.

Furthermore, increased supply would exert downward pressure on global oil prices which conflicts with the interests of the politically influential US domestic oil industry, which relies on a stable and relatively high price environment to justify its own capital-intensive operations. Consequently, US policy may be intentionally designed to keep Venezuelan oil in a state of controlled disrepair — sufficiently contained and blockaded — so as to limit its geopolitical utility to adversaries like Russia or China, but not so revived that it undermines American economic and energy interests.

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Miguel Santos García is a Puerto Rican writer and political analyst who mainly writes about the geopolitics of neocolonial conflicts and Hybrid Wars within the 4th Industrial Revolution, the ongoing New Cold War and the transition towards multipolarity. Visit his blog here. 

He is a Research Associate of the Centre for Research on Globalization (CRG). 

Featured image is from the author

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