The shadow of unpaid debts now stretches across the Caribbean Sea, fueling a dramatic escalation of pressure against Venezuela. It began with a claim of stolen assets, a narrative woven around decades-old nationalizations of foreign oil holdings, and has culminated in a near-total blockade of the nation’s oil exports.
The roots of this conflict trace back to 1976, when Venezuela, under President Carlos Andrés Pérez, asserted control over its oil industry, forming PDVSA. This move, largely accepted internationally, affirmed a nation’s right to its natural resources. However, a second, more contentious phase unfolded in 2007 under Hugo Chávez, targeting foreign involvement in the lucrative Orinoco Belt.
Chávez demanded majority control – at least 60 percent – in joint ventures with PDVSA. Companies like ConocoPhillips and ExxonMobil refused, leading to expropriation and a cascade of international arbitration cases. The result? A resounding wave of rulings favoring the ousted firms, judgments that now haunt Venezuela with billions in liabilities.
ConocoPhillips alone is owed over $13 billion, a figure that continues to grow with accumulating interest. An ICSID tribunal initially awarded them $8.7 billion in 2019, a sum Venezuela unsuccessfully attempted to overturn. ExxonMobil also secured a substantial award of $1.6 billion, though only a fraction has been paid.
These weren’t simply disputes over profits; they were adjudicated under international law, specifically bilateral investment treaties guaranteeing fair compensation for expropriation. Despite withdrawing from the International Centre for Settlement of Investment Disputes (ICSID) in 2012, Venezuela remains legally bound by cases filed prior to that date.
Tribunals determined that Venezuela’s actions violated international law, citing inadequate compensation, coercive negotiations, and discriminatory practices against companies who resisted the new terms. Now, enforcement has entered a new, aggressive phase. ConocoPhillips is relentlessly pursuing global asset seizures.
The most valuable prize? Citgo, Venezuela’s U.S.-based refining arm, estimated to be worth between $8 and $13 billion. Citgo is slated for auction to satisfy a staggering $21.3 billion in creditor claims. Beyond U.S. borders, favorable rulings in Caribbean jurisdictions, including Trinidad and Tobago, are opening the door to seizing proceeds from Venezuelan gas projects.
The U.S. government has authorized ConocoPhillips to aggressively pursue these assets, freezing Venezuelan government accounts, seizing vessels, and blocking oil revenue streams. While civil enforcement is standard practice, the sheer scale of these actions is unprecedented, bordering on economic warfare.
The administration’s justification extends beyond simply recovering investment losses. Rhetoric suggests a claim to the oil itself, implying U.S. ownership based on historical development – a position unsupported by international law. Venezuela’s sovereignty over its resources remains legally intact.
What’s truly novel is the use of unpaid arbitration awards to justify measures typically reserved for hostile states, including a blockade backed by the potential for military force. Venezuela counters that nationalization is a sovereign right and that compensation was offered, while also alleging bias within ICSID tribunals.
However, international law clearly stipulates that nationalization must be accompanied by prompt, adequate, and effective compensation – a standard Venezuela demonstrably failed to meet. The result is a complex entanglement of legal claims, national sovereignty, and geopolitical maneuvering.
The ultimate goal remains elusive. Is the demand for “returned assets” simply about settling the $20+ billion in arbitration debts? Or does it encompass broader compensation, regime change, or something else entirely? The ambiguity, coupled with the question of how to account for assets already sold or consumed, casts a long shadow over the future.
