By James T. Areddy
When Venezuela booted out American oil companies in a nationalization campaign nearly two decades ago, China stepped in. Now, Beijing's foothold there is in doubt as the U.S. asserts new power over Venezuela's oil patch.
Chinese government-owned oil companies hold claims to more than 4 billion barrels of Venezuelan oil, nearly five times as much as the only U.S. major that today produces in the South American nation, Chevron. Beijing's production deals, oil rigs and debt-backed supply arrangements have long bought it enormous sway in Venezuela -- all of it now suddenly subject to the Trump administration's preferences.
The Chinese producers expanded their claims in the aftermath of a 2007 Venezuelan nationalization drive that pushed out Exxon Mobil and ConocoPhillips. China quickly emerged as a financier, equipment supplier and political partner in what Caracas called an "iron brotherhood" that until now insulated it from U.S. pressure.
Since orchestrating the ouster of Venezuelan President Nicolás Maduro this month, President Trump has welcomed China to continue buying Venezuelan oil, so long as Beijing pays market prices. Nearly all of the country's paltry output in recent years had ultimately flowed there in largely black-market purchases, at a steep discount to global prices.
Trump has yet to articulate a position on the more strategic Chinese presence in the Venezuelan oil industry as a producer and claimant to reservoirs of crude in the ground, some of which are adjacent to blocks Caracas took from American producers.
China's embassy in Washington said its assets in Venezuela are governed by international law and benefit both nations. "China will take all necessary measures to protect its legitimate rights and interests in Venezuela," a spokesman said. Chinese oil companies didn't respond to requests for comment.
The White House and Energy Department declined to comment on Chinese oil production in Venezuela.
"The future of China's oil companies in Venezuela's oil industry is up in the air," said Erica Downs, a Chinese energy-policy specialist at Columbia University.
While Venezuela sits on the planet's largest oil reserves -- holding more than Saudi Arabia -- its sludge-like petroleum from regions like the Orinoco Belt is expensive and technically difficult to extract.
In speaking about China's presence in Venezuela this month, Secretary of State Marco Rubio echoed the administration's national-security strategy to "deny non-Hemispheric competitors" control of the region's vital assets. "You cannot continue to have the largest oil reserves in the world under the control of adversaries of the United States," Rubio told NBC's Meet the Press on Jan. 4.
Still, the security strategy of squeezing Beijing out of the region may bump up against some other Trump priorities, starting with a desire to jump-start Venezuela's oil-dominated economy. The president has also been at pains to maintain a working relationship with Chinese leader Xi Jinping ahead of a planned Beijing summit in April.
U.S. oil executives recently offered a lukewarm response to the president's request for $100 billion to rebuild the sector. Exxon Chief Executive Darren Woods called the country currently "uninvestable."
Oil sovereignty
China was desperate for oil when the late Venezuelan leader Hugo Chávez in 2007 stood under a banner that read "Full Oil Sovereignty, the Road to Socialism." As ConocoPhillips and Exxon refused to cede control of fields they had developed, Beijing jumped at the chance to buy in.
The Chinese economy at the time was blisteringly hot and on its way to topping the world in energy consumption, and Beijing was frantic to lock in what it called energy security.
After Exxon left its Orinoco Belt operations near the Amazon, government-owned China National Petroleum joined Venezuelan state-run company Petróleos de Venezuela, or PdVSA, as a minority partner there in a venture known as Sinovensa that is now China's biggest production base in Venezuela. Another Chinese major, Sinopec, grabbed offshore lots in the Gulf of Paria, near where ConocoPhillips had operated.
Through joint ventures with PdVSA, China's state-owned giants Sinopec and CNPC claim rights to an estimated 4.4 billion barrels of oil in the ground, versus Chevron's 900 million, according to research by Wood Mackenzie and Morgan Stanley Research.
Despite China's oil claims, it remains a small producer compared with Chevron, generating no more than 15% of Venezuelan output of under 1 million barrels a day. Indeed, some key Chinese holdings stand dormant, an illustration of controlling shareholder PdVSA's dysfunction under Maduro that has eroded daily production from over 3 million barrels a day in the 1990s.
Immediately before Maduro's ouster on Jan. 3, China was the indirect importer of more than 80% of Venezuela's oil exports, enjoying fire-sale pricing because sanctions on Caracas diminished its customer base.
Though U.S. intervention has now disrupted that trade, along with a shadow fleet of tankers that transported the oil, the impact on China is limited because Venezuelan crude satisfied a single-digit share of its approximately 11 million barrels in daily imports.
Mixed messages
What could be problematic for Beijing is Trump's assertion of U.S. control on the money generated by Venezuelan exports, particularly if whatever new sales mechanism Washington might approve unravels an oil-for-debt-relief arrangement that has for years governed China-Venezuelan trade. Venezuela owes at least $10 billion to China, its largest creditor.
Beijing has sent mixed messages about its production in Venezuela.
Today, China has a broad array of reliable energy suppliers including Russia and Saudi Arabia, even as it could hit peak oil demand within this decade as electric vehicles crowd out gasoline-powered cars.
Sinopec last February reached a deal to sell significant Venezuelan assets to a U.S. investor, former Chevron executive Ali Moshiri's Amos Global Energy Management. Amos, which didn't respond to requests for comment, has provided few details on the transaction for the Gulf of Paria holdings.
A clutch of small Chinese companies in recent years have stepped into Venezuela production deals, including one that several months ago floated a sophisticated new drilling platform onto Lake Maracaibo, a major production area. Chinese customs data also show a surge of exports last year of oil sector equipment to Venezuela, like steel pipe and spare parts for rigs.
"I really don't see the U.S. pushing China out," said Parsifal D'Sola Alvarado, who heads the Latin American Chinese Research Center of Bogotá-based Andrés Bello Foundation.
The analyst predicts the Trump administration will look the other way as Chinese production continues, akin to what unfolded in Argentina after it elected as president Beijing critic Javier Milei. "Milei doesn't talk about it, but China keeps doing what they're doing," he said.
Write to James T. Areddy at James.Areddy@wsj.com
(END) Dow Jones Newswires
January 23, 2026 23:00 ET (04:00 GMT)
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