By Ryan Dubé

During President Trump's first term, his administration asserted that executives at Venezuela's state-owned oil company, Petróleos de Venezuela SA, embezzled billions of dollars and used company aircraft to traffic in cocaine. Now it wants U.S. companies to go into business with the Venezuelan giant.

The Trump administration is counting on foreign entities working with the Venezuelan state oil company to fuel what the American president hopes will be a $100 billion investment boom in the South American country's energy industry. That is setting up a legal minefield for investors that have to go through PdVSA (pronounced peh-deh-VEH-sah) to tap Venezuela's vast oil wealth.

"If a company is going to want to do business in Venezuela, it's going to have to speak with PdVSA," said Oswaldo Felizzola, head of the energy center at the IESA business school in Caracas.

The country is said to have the world's largest proven reserves of crude and once produced 3 million barrels a day, ranking it among the world's oil giants. That production dropped to 300,000 a day at its lowest point under Venezuelan leader Nicolás Maduro and is now about 900,000 a day.

Since the U.S. captured Maduro on Jan. 3, the Venezuelan regime changed its oil-industry law, breaking sharply with a quarter-century of Chavismo, the movement started under Maduro's predecessor, Hugo Chávez, who advocated for "oil sovereignty" with stringent state control through PdVSA. Soon after the oil-industry law was changed last month, the U.S. Treasury Department eased sanctions on PdVSA, issuing a general license allowing American companies to export and sell Venezuelan crude.

Venezuela's Information Ministry and PdVSA didn't respond to requests for comment.

"We hope this reform will attract significant flows of international investment," said Delcy Rodríguez, Maduro's vice president and the country's interim leader. "We must go from being the country with the largest oil reserves on the planet to becoming a giant producer."

Some international oil companies have been skeptical about going into Venezuela after Maduro's departure. Exxon Mobil Chief Executive Officer Darren Wood called the country "uninvestable." Mike Wirth, the CEO of Chevron, the only big American oil company working there, said last month that the company's footprint could expand there "with the right changes" from the government.

"Major long-term investments are likely to prove elusive, with output increases set to be gradual at best," Oxford Analytica, a geopolitical risk analysis and advisory service owned by The Wall Street Journal's parent company, Dow Jones, said in a note Wednesday.

José Ignacio Hernández, a Venezuelan oil consultant and law professor at American University, said foreign companies might be reluctant to be associated with a company that has faced sanctions, with some of its managers having been accused of crimes.

"Would you sign a contract with an entity that is labeled as a criminal branch of the government of Venezuela?" he asked. "I would say no."

The hope for Venezuela and the Trump administration is that Venezuela's new model and further overhauls are attractive for investors, which has drawn interest from some smaller companies.

PdVSA will move away from stringent state control of oil assets and instead become more of a manager of Venezuela's contracts with investors, said Francisco Monaldi, a Venezuelan who directs the Latin America energy program at Rice University's Baker Institute for Public Policy.

"It will only operate a fraction of oil production, most likely less than a third," he said.

PdVSA still owns oil fields, refineries and gas stations. Under the new legislation, companies can operate in Venezuela by teaming up with PdVSA in a joint venture. The state company maintains majority control, but authorities can, on a case-by-case basis, give private companies management of operations. That is similar to the type of contract that PdVSA currently has with Chevron.

An alternative for companies to produce Venezuelan crude is to sign a service agreement with PdVSA that would allow them to operate state oil fields while assuming expenses and risks.

The Treasury Department hasn't authorized American companies to pump oil, but U.S. officials are expected to keep loosening a web of restrictions and sanctions to attract energy companies. A general license to extract oil could come as soon as this week, according to a person familiar with the plan. Bloomberg earlier reported the development.

For PdVSA, the shift is a dramatic one for a company founded 50 years ago during the nationalization of the oil industry in Venezuela, which is a founding member of the Organization of the Petroleum Exporting Countries.

PdVSA was considered one of the world's most-efficient state oil companies, holding a stake in refineries across Europe as well as in the U.S., where it owned gas stations under its subsidiary, Citgo. To protect the government's cash cow, politicians avoided meddling in PdVSA, which was run by highly trained engineers and other professionals.

That changed under Chávez, who transformed PdVSA into an arm of his left-wing movement after taking office in 1999. He appointed political loyalists to senior roles, eventually changed the color of the company logo from blue to socialist red, and spent company revenue on housing, appliances and food for the poor. PdVSA shipped heavily subsidized oil to Cuba and other Caribbean nations, exerting influence abroad.

When PdVSA workers went on strike in late 2002 to force Chávez from power, he fired about 19,000 employees, roughly half the company's workforce. The loss of experienced geologists, engineers and technicians contributed to a yearslong decline in a country that had once been one of the world's largest exporters.

"They politicized the entire PdVSA structure" and diverted the cash flow to political and international issues, said Juan Matias Szabo, a former senior official of PdVSA.

PdVSA is now virtually bankrupt, with roughly $60 billion in external debt and little hope of raising its production on its own, according to Venezuelan economists.

The company has little capital for oil-field investments and maintenance. Abandoned wells have rusted in the sun. Mismanagement, rampant corruption and U.S. sanctions caused oil production to tumble.

Henrique Capriles, an opposition politician in the National Assembly, said PdVSA can't be independently audited after years of mismanagement, corruption and lack of transparency.

"PdVSA undoubtedly has to stop being what it has been in recent years, which is the big slush fund of the ruling party," he said.

Nieves Ribullen, a former PdVSA worker, recalled noticing the deterioration of pipes and other infrastructure at the company's Amuay refinery in 2008. Four years later, an explosion there killed more than 40 people. Officials blamed sabotage, without offering evidence. Experts on the oil industry said it was likely caused by inadequate maintenance.

PdVSA workers found themselves having to participate in pro-government rallies, dressing in the ruling party's red. "If you didn't go, they'd put you on a list, and your next contract wouldn't be renewed," Ribullen said.

A system of patronage led to the ballooning of PdVSA's payroll. Today, it has roughly 85,000 employees, with less than 20% of those workers involved in oil activities, said Ivan Freites, a veteran oil workers union leader.

Many experienced oil workers fled Venezuela, taking jobs in energy industries in Colombia, Canada and elsewhere. Those who stayed saw their paychecks eaten away by hyperinflation as the economy collapsed under Maduro, who took power after Chávez's death in 2013. Some sold their uniforms and looted company equipment.

"Our purchasing power fell so much that I had to drive a taxi in Venezuela just to put bread on the table," said Carlos Márquez, a former PdVSA employee who now works at a water park in the Canary Islands.

Write to Ryan Dubé at ryan.dube@wsj.com

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(END) Dow Jones Newswires

Citgo's gas stations are independently owned. "The $100 Billion Bet on Venezuelan Oil Relies on a Broken State Company," at 11 p.m. ET on Feb. 4, incorrectly said they are owned by Citgo.

(END) Dow Jones Newswires

February 05, 2026 08:45 ET (13:45 GMT)

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