The Venezuelan oil and gas industry is a cornerstone of the nation’s economy, underpinning government revenue and influencing regional geopolitics. Once producing over three million barrels per day (bpd), years of underinvestment, alleged mismanagement, and international sanctions severely eroded both production and technical expertise. The state-run company, Petróleos de Venezuela, SA (PDVSA), struggled with ageing infrastructure and politicisation, while US sanctions restricted financing and market access, leaving Venezuela increasingly reliant on China and Cuba.
Despite holding the world’s largest proven oil reserves, much of the country’s crude is heavy or extra-heavy, requiring advanced refining capabilities. The kidnapping of President Nicolás Maduro and First Lady Cilia Flores in January 2026 marked a dramatic turning point, triggering a reassessment of sovereignty, foreign intervention, and the strategic significance of Venezuela’s energy resources. In the aftermath, US-led policy and military influence have reshaped export flows, investment structures, and private sector participation, creating a complex and rapidly evolving environment for the nation’s oil and gas sector.
Things as they were (before Maduro kidnapping):
Oil Production drastically declined as production fell from over 3 million barrels per day (bpd) in June 2020 to approximately 370 000 bpd, slightly recovering by late 2025 to 1.1 mill bpd. Years of underinvestment and lack of maintenance left refineries and pipelines broken, often operating at reduced capacity, relying on makeshift repairs. The state: Alleged mismanagement, politicisation, and corruption within the state-run company, Petróleos de Venezuela, S.A. (PDVSA), eroded technical expertise.United States (US) sanctions imposed from 2017 to 2019 restricted finance in various sectors directly impacting operations and market access. Venezuela logically expanded its oil market to China and for some time to Cuba, becoming particularly dependent on China. Venezuela has the world’s largest proven oil reserves. However, the oil produced was largely heavy or extra-heavy crude which is more expensive than normal crude oil and requires more technical prowess to refine.
On 3 January 2026 Nicolás Maduro and his wife, Cilia Flores, were kidnapped by US special forces on drug trafficking charges against which they pleaded not guilty. This particular incident brought about the question of sovereignty and whether the US acted malitiously in this regard. More than this the strategic importance of Venezuela for the US came to question: geologically; geopolitically; and, for our purposes, the oil & gas industry. The latter was seen to be important for the US realising control over the country with the largest proven oil reserves in the world, backed by data indicating oil reserves in the US lasting a short 11 years without importation (excluding new discoveries).
It is no secret that Donald Trump approved this mission, which also served as a warning for the rest of Latin America. We can confirm that Maduro was an authoritarian leader with an iron fist. In rendering the Venezuelan powerless to have fought the noble pursuit of Trump working for the people in the noble pursuit of victory, this courtesy has not been extended elsewhere, indicating underlying reasons or an amalgamation of them.
Things as they are (post-Maduro kidnapping):
Oil output contracted to an all time low as the US naval blockade blocked crude oil exports from Venezuela. Venezuelan oil is now shipped to Israel, to the Bazan Group which is Israel’s largest refiner. This is the first time since 2020 that oil reaches Israel. This process was led by a US-imposed arrangement. Privitisation: Venezuela has enacted a pro-business approach to the country’s existing oil policies. The reform offers lower taxes and royalties, as well as increased control over operations and sales, to private corporations, reducing the role played by the Venezuelan state.Due to US-led policy dominance in Venezuela, sanctions on transactions with entities from: Russia; Iran; Cuba; North Korea; and China, with Cuban sanctions lifted, are the order of the day. The US now control the purse-strings of Venezuelan oil sales giving Venezuela some of the revenues.
The Venezuelan oil and gas industry is in a new, intentionally stable phase. Structural weaknesses, structural weaknesses continue to strain production and refining capacity. US intervention has restructured export partnerships and opened the door to increased private and foreign participation. The US had thus achieved multiple goals: diversifying export partners; restricting oil exports; privatising the PDVSA, operationally, at least. We are left with many questions regarding the sale of Venezuelan oil, with the US benefitting, in a situation already perceived as an attack on sovereignty and the US positioning itself as the middle man in terms of Venezuelan oil sales.
Written by:
*Cole Jackson
Lead Associate at BRICS+ Consulting Group
Chinese & South America Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or IOL.
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