backIn the early morning hours of January 3, 2026, the U.S. military carried out an operation in Venezuela to remove and bring President Nicolas Maduro to face criminal charges in New York. President Trump has made clear that U.S. actions following Maduro’s removal will continue to focus on the revitalization of Venezuela’s oil industry.
This revitalization will require a significant capital outlay. Venezuela’s oil production peaked in the 1970s and late 1990s/early 2000s at approximately 3.5 million barrels per day. Energy industry analysts predict that bringing Venezuela’s oil production up from its current production levels of 1 million barrels a day to 3 million barrels a day would require hundreds of billions of dollars in investment over the next decade, while the maintenance of Venezuela’s current production levels would itself require over $50 billion of oil and gas upstream and infrastructure investment over the next 15 years.
The Trump administration has stated that it expects “United States oil companies . . .to go in, spend billions of dollars, fix the badly broken infrastructure and start making money for the country.” The White House has also noted that U.S. oil companies “are ready and willing to make big investments in Venezuela,” and that “they want to go in” – a view the Trump administration reiterated at its meeting with oil and gas executives on January 9, 2026.
Some investors, including energy companies, have expressed a pro-investment view, including by announcing plans to visit Venezuela and assess investment prospects in the country. For example, the chairman of consulting firm Signum Global Advisors stated that approximately 20 officials from the finance, energy and defense sectors, among others, have tentatively planned to travel to Venezuela in March to meet the new government. At the same time, many potential investors have noted the lack of a secure environment for investment, exacerbated by Venezuela’s withdrawal from the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”) and domestic laws disfavoring foreign investors.
This alert addresses the current investment environment and discusses potential risks based on the existing domestic and international frameworks. This discussion may be helpful to those involved in public policy discussions or considering investments in the short term.
Venezuela’s Investment Regime
The state of the investment regime in Venezuela reflects the politics of the last five decades, which comprised a socialist revolution and associated efforts to nationalize assets and strengthen control over the country’s vast natural resources.
As early as 1976, under President Carlos Andrés Pérez, Venezuela nationalized oil operations and created a single state-owned oil enterprise, Petróleos de Venezuela, SA (PDVSA), bringing all upstream oil activities under state ownership and engaging with foreign oil companies through service and technology agreements. After a financial crisis in the 1980s and 1990s, Venezuela opened its oil sector to foreign participation via government-structured projects and policies – like the Apertura Petrolera initiative and Presidential Decree 2095 – intended to attract foreign investment to develop Venezuela’s hydrocarbon resources. These new commercial opportunities were paired with access to international arbitration. In 1993, Venezuela joined the ICSID Convention, then proceeded to enter numerous bilateral investments treaties (“BITs”) with countries in North America, Europe, and South America over the next decade.
After President Hugo Chavez assumed office in 1999, however, Venezuela pursued a state-led economic model and implemented widespread nationalization of foreign-owned assets – not only in oil and gas, but also in the mining, electricity, telecommunications, and cement industries. These measures prompted a sharp increase in investor-state disputes, as affected investors invoked protections under BITs, including guarantees of fair and equitable treatment and compensation for expropriation.
Claims arising from this nationalization effort include disputes brought by companies involved in oil and gas operations; claims in the cement production sector; and, among others, claims in the mining sector following the revocation of mining concessions. These cases were either settled or decided in favor of the investor, but many investors have faced challenges in obtaining payment. From 2007 to the end of 2011, twenty known investor-state arbitrations were initiated against Venezuela – sixteen of these arbitrations were either settled or decided in favor of the investor.
Withdrawal from ICSID in 2012
Against this backdrop of escalating and high-profile investor-state disputes, in January 2012, Venezuela formally withdrew from the ICSID Convention. Venezuela’s withdrawal from ICSID, however, did not have a retroactive effect on investors and did not eliminate existing treaties. As a result, investor-state disputes involving Venezuela persisted well after its exit from ICSID. Since the beginning of 2012, forty-two known investor-state arbitrations have been launched against Venezuela.
Since withdrawing from ICSID, Venezuela has terminated certain treaties and challenged the jurisdiction of ICSID tribunals on the basis of its withdrawn consent to the Convention. However, many of its BITs remain in force, including with the UK, Barbados, and Sweden, for example. Under these agreements, investors still have access to Investor State Dispute Settlement (“ISDS”) through various fora, most commonly ICSID Additional Facility and UNCITRAL ad hoc arbitration, with several instruments also permitting recourse to domestic courts. 1Some of Venezuela’s BITs allow UNCITRAL arbitration only if ICSID is not available. One UNCITRAL tribunal has already refused jurisdiction where there was a high probability that ICSID would have registered the claim. Some BITs are stricter still, permitting UNCITRAL only when both ICSID and the ICSID Additional Facility are unavailable. Therefore, if the investor’s home state is an ICSID Contracting State, Venezuela’s withdrawal does not prevent a claim from being brought under the Additional Facility Rules. In short, Venezuela remains subject to claims brought under ICSID. See, for instance, Smurfit Holdings B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/18/49).
Venezuela’s willingness to arbitrate disputes outside the ICSID framework is demonstrated by its more recent BITs. For example, the China-Venezuela BIT, which entered into force in 2025, expressly provides for dispute resolution through domestic courts or UNCITRAL arbitration. This provision gives Chinese investors a distinct advantage by affording them clear access to international arbitration. Consequently, foreign investors from other countries should evaluate Venezuela’s other BITs to determine if they can similarly take advantage of non-ICSID arbitration mechanisms to protect their investments.
Beyond the relative hurdles to investor protection that exist within the international investment framework, laws requiring dispute settlement in national courts – which are widely regarded as lacking independence from the regime – and sovereign ownership laws over hydrocarbons serve as additional hurdles within Venezuela’s domestic legal framework.
The Constitution and the Organic Law on Hydrocarbons provide the legal framework for oil production in Venezuela. As outlined in Articles 112 and 113 of the Constitution, all subsoil wealth, including oil, gas, and other natural resources, belong to the State. While foreign investors may participate in certain aspects of the exploitation of these resources through concessions, permits, licenses, and joint ventures, they may only participate in oil exploration, production, transport and storage as part of a joint venture in which PDVSA holds at least 50% participation. Gaseous hydrocarbon and other forms of natural resource exploitation are regulated by additional laws, further complicating navigation of investment in this space.
Investments outside of those sectors subject to specific legislation (i.e., matters of hydrocarbons, mining, telecommunications and social media) are governed by the Constitutional Law on Productive Foreign Investment. This law dictates that all foreign investments will be subject to the jurisdiction of the courts of Venezuela, reflecting the country’s push to distance itself from ISDS and its associated investor protections.
The legal framework within which a foreign investor would operate in relation to investments in Venezuela is thus complex, both domestically and internationally.
Forward-Looking Protections for Investors
The nuances of Venezuela’s investment environment thus require investors intending to enter the country to adopt a creative and strategic approach to assessing the protections that may be obtained in both the short and long term. This approach should include an analysis of existing laws, including the applicable international and domestic frameworks. For U.S. investors, this may also include creative thinking about the protections that may be provided by the U.S. government.
As the Trump administration discusses investment in Venezuela, some companies have already suggested additional options for increasing investor confidence in the country, including by having the U.S. government sign contracts guaranteeing payment and security or forming public-private joint ventures. For U.S. investors, this could act as a form of insurance against State actions that harm foreign investments and could even present an improvement on treaty protections by mitigating Venezuela’s refusal to pay treaty awards. We are continuing to monitor changes to both international and domestic frameworks.
Sanctions Considerations
Investment opportunities in Venezuela are emerging against a backdrop of ongoing U.S. sanctions that continue to apply, including to transactions in the hydrocarbons sector. While there has been a change in Venezuela’s named leadership following recent events, the core sanctions remain intact (for the time being), creating heightened sanctions compliance complexity and counter-party diligence needs. In this regard, given that the Venezuela government and all of its instrumentalities remain comprehensively blocked, the Trump administration has already previewed sanctions relief “to enable the transport and sale of Venezuelan crude and oil products to global markets.”
Given the Trump administration’s stated objective to accelerate oil-sector activity, investors may have a strong commercial incentive to move quickly; however, prudent sequencing is essential. Prior to binding commitments, parties should confirm that contemplated activities are permissible under applicable sanctions and that any necessary authorizations are in place.
Thus, while Venezuela presents emerging opportunities amid enduring sanctions-related risks, any successful entry into and expansion of the Venezuela market will involve integrating a sanctions assessment at the front end of any deal structuring and on maintaining flexibility to adjust as the policy environment evolves.
Conclusion
As it currently stands, existing Venezuelan laws remain in place and recourse against any harmful actions by the Venezuelan government is limited to claims against Venezuela. In order to encourage investment by U.S. companies, U.S. leadership may offer an associated strategy to ensure investor protections. Assessing those protections is particularly important considering the long-term nature of hydrocarbon-related investments.
Consequently, companies intending to enter the country should carefully consider strategies to mitigate associated investment risks. King & Spalding is well-versed in these issues and prepared to provide strategic advice on disputes or enforcement actions that may arise in this new era of development in Venezuela. Further, our team is prepared to assist with pre‑investment risk scoping, counterparty and structure diligence, documentation of sanctions‑sensitive protections, and ongoing compliance governance as this new phase of development proceeds.