Chevron will resume its oil extraction operations in Venezuelan territorial waters, according to a report published by the Wall Street Journal Thursday. The decision by the Trump administration is a step towards a more conciliatory policy with the Maduro government, and follows shortly after an arrangement was reached to free 10 American prisoners in exchange for the release of 250 Venezuelan nationals being held in the CECOT prison in El Salvador.
The proper diplomatic posture towards Venezuela has been a matter of fierce debate within the administration since the beginning of President Donald Trump’s second term. During his first four years in office, Trump pursued a “maximum pressure” campaign against the authoritarian Maduro government, placing harsh sanctions on the country in 2019 after a disputed election resulted in the U.S. recognizing Juan Guaidó as legitimate president of Venezuela. Since his inauguration in January, however, the Trump administration has vacillated between the high-pressure approach of the president’s first term and a more conciliatory approach.
The debate over Chevron’s drilling activities in Venezuelan territories already featured in that debate, and at the time it appeared that the issue had been definitively settled in favor of a confrontational posture towards Maduro. The approaching expiration date of Chevron’s license resulted in an open breach within the administration in mid-May: Special Envoy Ric Grenell, who had just negotiated a prisoner release, told Steve Bannon on air that the license would be renewed; in response, Secretary of State Marco Rubio posted on X that the license would expire as planned. Rubio’s position was supported by Latin America hawks in Congress, including representatives Mario Díaz-Balart (R-FL), María Elvira Salazar (R-FL), and Carlos Giménez (R-FL). Grenell was supported by a number of MAGA populist insiders, including Bannon and Laura Loomer, who argued that Chevron’s withdrawal would effectively hand over the Venezuelan oil fields to China.
At the time, Rubio and the hawks carried the day, and a new license was drawn up that allowed Chevron only the bare minimum of maintaining its existing infrastructure. Further drilling looked to be off the table. But with a new agreement in the process of being drawn up, it seems that Grenell’s party may have achieved victory for the long-term.
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While the details of the new license have not been revealed, and may not yet have been determined, sources say that the agreement will not allow the Maduro government to profit from any oil extracted during the operations. This, however, is without doubt a legal and economic fiction. The Venezuelan government has no incentive to allow Chevron to use their oilfields without profiting from the partnership. The workarounds—in-kind swaps of oil for goods have been mentioned—will accomplish much the same result, furnishing the government with imports of cash value equal to the worth of extracted oil and allowing them to use the money that would have been allocated to those purchases for other purposes.
There are a number of benefits that the Trump administration may hope to gain by cultivating a working relationship with the Maduro government. The continued acceptance of deportation flights is a significant one, given the large number of Venezuelan illegal immigrants in the U.S. Additionally, the Trump administration may hope to reduce Chinese influence in Latin America through cooperation with Maduro. But the continued effectiveness of such a relationship remains a major question. Maduro may be willing to take advantage of opportunities offered by the U.S. from time to time, but he is well aware that his continued leadership of Venezuela is contrary to American interests in Latin America. He certainly has not forgotten American support for would-be deposers Juan Guaidó and Edmundo González. Whatever cooperation the U.S. can achieve with Maduro will be only on grounds he finds immediately beneficial, and there can be no doubt that he will not hesitate to injure American interests in the future if he finds it to his advantage.
For now, however, the Trump administration believes they have a winning hand. The release of American prisoners and continued acceptance of deportation flights are proof that diplomatic engagement with the Venezuelan government can achieve concrete policy goals. The resumption of Venezuelan drilling by Chevron promises to lower American gas prices and boost American industry by increasing the supply of oil to Gulf Coast refineries. At a time when the administration’s diplomacy abroad has suffered repeated setbacks, even small victories close to home could prove politically precious.
