Ending Maduro’s Oil Lifeline: Reviewing Oil Licenses Granted Under the Barbados Accord

Photo: GUSTAVO GRANADO/AFP/Getty Images
Expectations are sky-high for the Trump administration’s policy toward the Maduro regime in Venezuela. Many Venezuelans, including leading voices in the opposition, grew tired of the Biden administration’s unwillingness to bring serious financial consequences to the Maduro regime following its brazen election theft in July 2024. Specifically, members of opposition leader María Corina Machado and president-elect Edmundo González Urrutia’s teams have called for the suspension of Office of Foreign Assets Control (OFAC) licenses permitting the Maduro regime to operate jointly with Western oil companies to pump Venezuelan oil. The Biden administration rebuffed these calls and kept the licenses intact.
Originally, the Biden administration lifted sanctions on the Maduro regime in exchange for democratic concessions and promises of a freer and fairer election. Almost immediately, the regime violated these agreements and failed to keep its long-term promises on democratic openings and human rights. After announcements of Venezuela sanctions “snap back,” the Biden administration began issuing licenses—this time, on national security grounds and without transparency. Indeed, when asked directly about the licenses and the lack of justification for maintaining them, Biden administration officials struggled to explain why the licenses remained active when the conditions under which they were granted would mandate their revocation. Biden administration officials constantly reiterated that sanctions policy is under constant review.
The result has been clear. After getting caught red-handed by an organized and competitive opposition, Maduro nevertheless maintains an important financial lifeline—funded by Western oil companies—despite clamping down on the opposition and pushing Venezuela to one of the world’s most repressive authoritarian regimes that is actively committing, according to the International Criminal Court, crimes against humanity.
Nevertheless, by the end of 2024, Venezuela achieved a four-year high in both oil production and export. Given the decrepit state of Venezuela’s oil industry, this would be an impossible task without the assistance and partnership of Western oil firms. Venezuela’s democratic opposition has estimated that Maduro has raked in billions operating joint ventures—in the ballpark of $500 million per month. This is real money that Maduro can use to pay off regime insiders and maintain power.
The Trump administration has an opportunity to move in a different direction. In his Senate confirmation hearing, Secretary of State nominee Marco Rubio addressed the issue of oil licenses for Venezuela. “They have these general licenses where companies like Chevron are actually providing billions of dollars of money into the regime’s coffers, and the regime kept none of the promises that they made,” he said. “All that needs to be re-explored.” Trump, too, said recently that the United States does not need Venezuelan oil and should revisit the issue of licenses. In his first 24 hours, Rubio held a meeting with Machado and González to express his support.
Reticence on Licenses
The Biden administration justified the use of oil licenses for the Maduro regime with several principal arguments. Those arguments are summarized, examined, deconstructed, and ultimately, rejected here.
Oil Licenses Provide Greater Transparency in the Industry.
Partly as a result of sanctions and mostly because of pervasive corruption, the Venezuelan oil industry has been impaired by economic informality, increasing its inefficiency and opacity. Under sanctions, oil exports have been deviated to black markets, with big discounts that favored corruption and reduced fiscal incomes. Nontraditional firms, including shell corporations, have increased their role in the oil industry. The cryptocurrency scandal overseen by the now-imprisoned former oil minister Tareck El Aissami, which resulted in the deviation of billions of dollars through fraudulent invoices and payments in cryptocurrency, is representative of these challenges.
The Biden administration argued that oil licenses brought transparency back because traditional oil firms—Chevron, Maurel & Prom, Eni, and Repsol—have displaced nontraditional firms. Meanwhile, exports are conducted through regular channels—with no black-market discounts. Requirements from OFAC on reporting ensure publicly available data.
However, this position does not consider how Chevron, Maurel & Prom, Eni, and Repsol perform oil activities. These firms signed contracts governed by the so-called 2020 Anti-Blockade Law, which covers production and commercialization activities, abolishes checks and balances, and enforces confidential conditions. Therefore, the new oil contracts, including agreements to distribute oil rents between private investors and Petróleos de Venezuela, SA (PDVSA), are confidential. Licenses have not restored transparency in the Venezuelan oil industry due to the Anti-Blockade Law.
Oil licenses have not brought the expected transparency on where Maduro is spending oil money and the extent to which he is receiving royalties and tax revenues. The regime stopped publishing almost all financial data several years ago. Neither the regime nor any of the companies operating in Venezuela have made public the terms of the agreements allowing them to operate. Furthermore, oil activities not covered by the licenses, including the operations of PDVSA, and China and Russia’s joint ventures, result in opaque incomes.
Lastly, General License 41, which authorized Chevron to operate joint ventures in Venezuela, prohibits the payment of “any taxes or royalties to the Government of Venezuela,” giving the false impression that Maduro will not receive any income, mainly based on royalties and taxes. However, as many analysts concluded, Maduro gets a share of the income derived from the oil activities of Chevron, Maurel & Prom, Eni, and Repsol. The exact amount of that share is unknown because of the confidential rule imposed by the Anti-Blockade Law. Moreover, in what would appear to be a clear violation of General License 41, Bloombergreported recently that Chevron filed millions in taxes in Venezuela.
Therefore, there is no public information about how much money the Maduro regime captured from oil revenues or how those incomes are spent. Taking aside the confidentiality imposed by the Anti-Blockade Law, the management of the Maduro regime’s national budget is not subject to checks and balances, transparency, or accountability, explaining why Venezuela is considered among the most corrupt countries in the world.
According to some specialists, the regime’s take could be 50 percent of the production undertaken by Chevron, Maurel & Prom, Eni, and Repsol. That production accounts for approximately one-third of Venezuela’s total output. Based on this estimation, OFAC licenses may have provided an income of up to $3.2 billion annually to the Maduro regime. Rather than enforce transparency, this income has enhanced the fiscal capacity to advance in corruption and systematic human rights violations.
Oil Licenses Provide a Modest Contribution to Global Energy Security, Especially for Gulf Coast Refineries Accustomed to Refining Venezuelan Crude
The Biden administration also argued that Venezuela had resumed its role as a strategic energy partner of the United States following Russia’s invasion of Ukraine. U.S. refineries on the Gulf Coast now have access to a reliable oil supply from Venezuela.
However, Venezuela’s oil supply is unstable because Maduro has not tackled the root cause of the oil industry’s collapse: predatory institutions that expropriated private property rights and suppressed PDVSA’s technical autonomy. As CSIS has explored elsewhere, the numbers do not add up. To resume production to the famed levels of 1998, when Chavismo first took over the country, the oil industry will require major institutional reform and political stability. But Maduro cannot provide either of those conditions; rather, the regime has promoted an institutional solution based on the Anti-Blockade Law, which exacerbates the country’s rule of law challenges. There is a reason, after all, that Chevron’s production has remained relatively stable at approximately 220,000 barrels per day.
Oil Licenses Can Relieve Sanctions Pressure and Thereby Reduce Migration, Another Key U.S. Objective with Venezuela
The outflow of refugees and migrants from Venezuela is one of the largest displacement crises in the world, with almost 7.8 million migrants and refugees as of December 2024—even bigger than Syria or Ukraine, both countries that are at war or had internal conflict. The root causes that generated this unprecedented flow of migrants and refugees remain unchanged: democratic breakdown, repression, and a lack of basic human rights combined with a deep economic crisis driven by mismanagement, devastating policies, 800 percent inflation, and a kleptocracy that has characterized the Chavez and Maduro regimes for the last 25 years.
Even though some still blame the imposition of U.S. sanctions for degrading standards of living in Venezuela, the reality is that Venezuela’s economic and humanitarian deterioration hit the hardest in 2014, before the application of broad U.S. sanctions.
The Biden administration viewed sanctions relief as a means to ameliorate the economic drivers of migration from Venezuela. However, the numbers continued to increase while Biden was in office. Federal authorities reported nearly one million encounters at the southern border with Venezuelan nationals last year. This further evidences the fact that, contrary to Maduro’s rhetoric, sanctions themselves are not what is fueling the migration crisis. Rather, the regime has been remarkably successful at centralizing the wealth accumulated from sanctions relief at the top, while Venezuela’s middle and lower classes remain out in the cold.
Not only have targeted economic sanctions limited Maduro’s ability to finance his regime’s activities by reducing oil and illegal mining earnings, but they have also strained his inner circle. His control over state institutions and assets is slipping along with public confidence in his regime, which was evidenced by his epic loss in the July 2024 presidential election.
Oil Licenses Can Help Better Human Rights Practices in the Country with the Western Private Sector Present
The Biden administration has argued that human rights practices could improve with incentives to maintain the oil licenses and Western oil companies present in Venezuela. But more oil money gives Maduro more resources to fuel repression and human rights violations. Although government revenues have been used in the past to bankroll social programs, Maduro’s regime has always neglected to provide basic necessities to Venezuelans, such as food, clean water, medicine, and electricity. Instead, the regime usually profits directly from these revenues, funding illicit projects, buying the loyalty of military officials, and increasing arbitrary detentions of members of the opposition, human rights defenders, and social leaders.
The Inter-American Commission on Human Rights recently released a report stating that the Maduro regime’s repression and political persecution have intensified in response to citizen protests against his electoral fraud. Around 300 spontaneous demonstrations have been violently suppressed by state security forces and pro-regime civilian groups. The regime’s Operation “Tun Tun” has resulted in at least 25 deaths, more than 2,000 arbitrary detentions, forced disappearances, acts of torture, and other grave human rights violations. Security forces are still conducting raids without warrants, mass arrests, and perpetrating systematic violence against innocent Venezuelans.
These human rights violations and practices of “state terrorism” stem from the fact that the executive branch has taken control of most state institutions. Coupled with widespread corruption, the regime has acted with total impunity—even when they expropriated over 1,000 companies in the early 2000s. Therefore, the country’s lack of constitutional order and rule of law represents a risk for the Western private sector, being at the mercy of a regime that can punish companies instantly if not in compliance with regime demands. Sadly, oil-rich Venezuela is at the dire end of economic indices from the World Bank and the World Economic Forum and represents no incentive for either national or international companies to do business or to promote better human rights.
Oil Licenses Keep the “Axis of Authoritarians” at Bay in Venezuela
Some analysts express concern for a concert of powers—China, Russia, and Iran—that support Maduro and see his survival as existential to their national interest. In general, these analysts believe U.S. policy has pushed this bloc of countries closer together by encouraging the sharing of sanctions-busting strategies, corruption schemes, and the transplantation of survival strategies, rather than the axis of authoritarians realizing their mutual interests can be best pursued together and with coordination. The Biden administration worried that the partnership of the axis countries would prevent the United States from peeling any one country off the alliance and therefore away from Maduro.
However, Maduro long ago made his bed with the authoritarian axis. For years, he has been ensconced in a web of authoritarian leaders. Following the Biden administration’s sanctions lifting on the Maduro regime, the regime could send its oil practically anywhere in the world. Despite a wide-open playing field, China remained the top destination for Venezuela’s oil in 2024. In addition, licenses have not displaced the role of China and Russia, which are still relevant players in Venezuela’s production and will remain in that role under the Maduro government. Notably, China needs to control oil production to ensure the repayment of billions in debt facility by past loan agreements.
Oil Licenses Keep U.S. and Western Oil Companies from Being Expropriated and Turned Over to Axis Countries
Another concern frequently cited is the potential for the Maduro administration to expropriate Western oil operations in the event of licenses being revoked. Many analysts also cite a fear of expropriation being to the benefit of Russia, Iran, and China, which might move in to take over these operations. This set of concerns is not new for the Trump administration—a license for Chevron in the first Trump administration mandated it cease activity in Venezuela, except for the ability to maintain equipment and pay staff, thus reducing the likelihood of expropriation.
Further, there are many “if-then statements” contained in this line of argument.
- If Maduro expropriates in response to the revocation of licenses
- If fellow authoritarians express an interest in a greater role in the Venezuelan oil industry
- If Maduro then hands Western operations to axis powers
There is reason to believe, however, that Russia, China, and Iran do not have much interest in growing their presence in Venezuela’s oil industry. China has lent more than $60 billion to Venezuela and would like its money back. Iran is girding for a “maximum pressure” campaign and reeling from economic hardship and the loss of its so-called axis of resistance in the Middle East. And Russia, perhaps the most likely Venezuelan partner interested, has a financial interest in seeing less oil on the international market—even sanctioned oil—to keep its own coffers full and thus fund its war machine in Ukraine.
Returning to a Pressure Campaign
The arguments in favor of maintaining oil licenses have not held up, while the conditions on the ground in Venezuela have changed dramatically since July 2024. U.S. sanctions policy, too, should change accordingly.
Sanctions should continue to be leveraged as an instrument of pressure against the Maduro regime. Polling demonstrates that the longer Maduro stays in power, the more Venezuelans will flee. Although Maduro has promised to keep migrants in Venezuela, he cannot make these promises in good faith. Venezuelans are fleeing because of Maduro’s theft and subsequent repression.
Although oil licenses are not the only element of U.S. policy toward Venezuela that is likely to change, the most basic starting point for pressure against Maduro is a revocation of current oil licenses allowing Western firms to partner with PDVSA.
Ryan C. Berg is the director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jose Ignacio Hernández is a senior associate (non-resident) with the Americas Program at CSIS. Alexandra Winkler is a senior associate (non-resident) with the Americas Program at CSIS.