Venezuela's oil is a focus of Trump's campaign against Maduro

Washington: The Nobel Peace Prize winner made her pitch by live video to a business conference in Miami attended by US executives and politicians, including President Donald Trump.

"I am talking about a $1.7 trillion opportunity," María Corina Machado, Venezuela's main opposition leader, said last month, weeks after winning the peace prize for challenging Nicolás Maduro, the country's autocratic leader.

She highlighted Venezuela's enormous oil and gas reserves -- "We will open all, upstream, midstream, downstream, to all companies" -- as well as its minerals and power infrastructure. Her message has been unwavering since early this year, when she boasted of her country's "infinite potential" for U.S. companies on a podcast hosted by the president's oldest son, Donald Trump Jr.

She has had a receptive audience.

The president and his aides have insisted publicly that their lethal military operations around Venezuela and pressure campaign against Maduro are mainly aimed at protecting Americans from drug trafficking. But Venezuela is not a drug producer, and narcotics smuggled through the country mostly go to Europe.

Behind the scenes, administration officials have also focused intently on Venezuela's oil reserves, the largest in the world.

Their importance is evident in secret negotiations between U.S. officials and Maduro about oil, and in conversations that Donald Trump's aides and allies have had with Machado and other Venezuelan opposition figures.

Trump has publicly made clear his interest in control of Venezuela's reserves. In a speech to Republicans in North Carolina in 2023, four years after he backed efforts during his first term to oust Maduro, Trump said, "When I left, Venezuela was ready to collapse. We would have taken it over, we would have gotten all that oil, it would have been right next door."

The role of oil in the soaring tensions between Maduro and Trump was underscored by the dramatic U.S. seizure Wednesday of a tanker that was traveling across the Caribbean Sea carrying crude for Cuba and China. Trump said he would keep the cargo, though his legal authority to do that is questionable.

The action was a sharp escalation in Trump's monthslong campaign against Maduro, which has included 25 attacks on boats that have killed at least 95 people, acts that many legal experts say are illegal.

Venezuela and its oil lie at the nexus of two of Trump's stated national security priorities: dominance of energy resources and control of the Western Hemisphere. Venezuela has about 17% of the world's known oil reserves, or more than 300 billion barrels, nearly four times the amount in the United States. And no nation has a bigger foothold in Venezuela's oil industry than China, the superpower whose immense trade presence in the Western Hemisphere the Trump administration aims to curb.

"When President Trump has talked about Venezuela and other comparable countries, he has always emphasized the importance of having the U.S. have access to those oil resources," said Francisco R. Rodríguez, a professor at the University of Denver who studies the political economy of Venezuela.

Trump has spoken repeatedly about getting oil and other natural resources as a reward for U.S. military intervention on foreign soil. "I've always said take the oil" was a favorite line in his 2016 presidential campaign.

In his first term, he said he would "keep the oil" in Syria because of U.S. troops there. He has said the United States should have taken oil from Iraq and Libya as payment for military interventions that toppled those governments.

In 2019, Trump ordered his aides to have Juan Guaidó, the Venezuelan opposition leader at the time, commit to giving the United States access to his country's oil and shutting out China and Russia if Guaidó wrested power from Maduro in a U.S.-backed effort, according to a memoir by John Bolton, then the national security adviser. Bolton called it "vast overreaching."

Maduro sees Venezuela's oil as an important geopolitical tool as well.

The country's leaders rely on China's oil purchases as a bulwark against economic sanctions imposed by the first Trump administration and kept on by President Joe Biden. In April, Delcy Rodríguez, the vice president of Venezuela, asked Chinese leaders during a visit to Beijing to make greater investments in her country's oil industry and to buy more crude. China already accounts for 80% of Venezuelan oil purchases.

Oil Under Duress

In recent months, Trump's aides have debated how to get greater access to Venezuela's oil for American companies, given Maduro's hostility and China's presence, current and former officials say.

Richard Grenell, a special envoy dealing with Venezuela and the president of the Kennedy Center, has led talks aimed at reaching a grand bargain with Maduro. The Venezuelan leader made an offer to Trump that included opening up the country's oil industry to Americans, beyond the limited access given to Chevron, which operates there with a newly extended confidential license from the U.S. government.

Trump has rejected that offer, because other top aides have successfully argued that Maduro cannot be trusted and is playing for time. That camp, led by Marco Rubio, the secretary of state and national security adviser, has pushed for forcefully ousting Maduro. They argue that a conservative, free-market-oriented leader -- namely Machado -- would favor U.S. companies and limit Chinese investment.

Trump suggested to Maduro in a phone call last month that he leave office. Maduro has refused to give up power anytime soon, despite the buildup of U.S. military forces in the Caribbean and Trump's repeated threat of going beyond boat strikes to hitting targets inside Venezuela.

The seizure of the tanker and new sanctions on Venezuela's oil sector are aimed at shaking Maduro's stubbornness by demonstrating that the United States is willing to choke off the country's greatest source of income, current and former officials said.

The United States is likely to seize more tankers carrying Venezuelan oil soon, U.S. officials said. As it did last week, the U.S. government could justify any future seizures by citing a history of the tankers' carrying oil from Iran, which is under a stricter set of sanctions than Venezuela.

The United States has seized only a handful of oil tankers in recent years. All those actions have been based on suspicion of Iranian oil being used to finance the Revolutionary Guard, an arm of the Iranian military that the first Trump administration designated a foreign terrorist organization, said Edward Fishman, a former sanctions specialist at the State Department.

A few more U.S. seizures of tankers carrying Venezuelan oil could lead to companies' deciding to avoid the country and a subsequent loss of oil revenues, said Tom Warrick, a former State Department official who also worked as an oil industry lawyer.

"The Trump administration strategy is now revealed as very clearly targeting that cash flow," he said. "Venezuela has a fairly small amount of cash on hand, so losing that tanker will start to hurt fairly quickly."

Trump has not spoken publicly about helping American companies get a bigger share of Venezuela's oil as a goal of that campaign. But he has often mentioned it privately, said people familiar with the conversations.

In talks this year, U.S. officials negotiated with Maduro on potential arrangements to push Chinese and Russian oil companies out of Venezuela and to open up a bigger role for American companies.

China has curbed its direct investment in Venezuela's industry in recent years. Maduro appeared interested in attracting greater American investment, U.S. officials said. But he remained adamant about holding onto power, so the talks stalled.

Drilling in Wartime

Trump has authorized the CIA to conduct covert operations in Venezuela, and he could decide to oust Maduro violently, using the agency as the spearhead or the U.S. military or both.

However, many experts on Venezuela expect the aftermath of such an action to be chaotic. U.S. officials from several agencies in the first Trump administration reached that conclusion in war games in 2019.

Turmoil in a post-Maduro Venezuela could complicate the desire and ability of American companies to expand their presence there.

No major Western oil companies immediately entered Iraq or Libya after the U.S. military interventions there that brought down the governments and ignited civil wars. It took years for bigger companies to start operations in those countries. By contrast, Chinese oil companies signed contracts to operate in Iraq's southern fields during the civil war, and they have generally had a much greater risk tolerance for being in conflict zones.

The appetite of large U.S. companies for entering the Venezuelan industry could well depend on whether the U.S. pressure campaign and any military operations result in chaos or stability.

"American oil companies work in some pretty dangerous neighborhoods, but what they are going to be interested in is the bottom line," said Oliver B. John, who worked as a U.S. diplomat on economic issues in Gulf Arab nations.

Chevron has operated in Venezuela for a century and is the one American company that stuck it out in the country as the Venezuelan government forced Western firms decades ago to become minority partners in joint ventures with the state-owned oil company, Petróleos de Venezuela, SA, or PDVSA.

American companies were a major presence in the industry until the 1970s. That decade, Venezuelan leaders put the industry under state control, creating PDVSA, in a popular action that was a hallmark of the country's democratic and nationalist movements. Hugo Chávez, the socialist leader, enshrined that in the constitution after he came to power in 1999.

Machado has talked in general terms about how she would reshape the industry if she were to take power. She said in a video talk in June with the Council of the Americas, a business group in New York, that she would enact a "process of privatization" and have a national agency open the sector to private investment. The goal would be for Venezuela to produce about 3 million barrels per day of oil within 10 years, triple the current production rate, she said.

However, a nationalized industry is popular with Venezuelans because of its historical roots, and "privatizing Venezuela's oil industry would be controversial in many senses," Rodríguez said.

The struggles of the industry intensified after the first Trump administration imposed sanctions on it. Those hobbled operations throughout the country, including refineries that can process oil with high sulfur content, typical of Venezuelan crude. Chevron's joint venture in Venezuela has used oil refineries along the Gulf Coast of the United States, and other U.S. companies expanding into Venezuela could take advantage of that capacity.

The largest foreign company with investments and operations in the Venezuelan industry is China National Petroleum Corporation, or CNPC, a state-owned enterprise that does joint ventures with PDVSA. But since 2019, it has taken a more passive role in Venezuela to avoid violating U.S. sanctions. Last year, a private Chinese company, China Concord Resources Corp., signed a 20-year contract with PDVSA to invest more than $1 billion to develop Venezuelan oil fields.

These days, Venezuelan oil going to China is a result of purchases by Chinese private companies, Rodríguez said.

Chinese national energy companies were receiving Venezuelan oil as a result of Chinese state-owned banks' taking oil as payment for loans to the Venezuelan government. But Venezuela faltered in making payments years ago -- the debt was $19 billion in 2020 -- and China has stopped lending to it.

Chinese officials and executives have become more cautious when engaging with Venezuela, while still looking for ways to work with Maduro's government, said Margaret Myers, a scholar at Johns Hopkins University who studies China's relations with Latin America.

"There has been growing disillusionment on the part of China," she said. "But they remain committed to generally staying put."