Venezuela’s top court okays Halliburton to go back into the oilfields

More normalisation will come, albeit slowly

WHAT Venezuela’s top court has allowed Venezuela to return to work and has feed up its seized assets

WHY Relations between Caracas and Washington are steadying

WHAT NEXT It is unclear if the Halliburton work is still subject to US sanctions

Venezuela's Supreme Court of Justice (TSJ), in two rulings, has allowed immediate resumption of oilfield operations by Halliburton's local subsidiary under Venezuelan law and the return of assets seized in Zulia and Monagas states, according to a ruling reported by state media.

Halliburton, the world's second-largest oilfield services company, had been idle in the country since December 2020 under restrictions imposed by the US Office of Foreign Assets Control (OFAC). The company filed its case with the supreme court in January and won a temporary suspension of the asset seizure in March before this month's final ruling, said Guacamaya.

The ruling lands seven months after Washington's position on Venezuela's oil sector was upended by a US military operation that removed President Nicolás Maduro in January.

Interim leader Delcy Rodriguez, who replaced Maduro with the blessing of the Trump administration, has spent the months since courting foreign investors to rebuild an industry hollowed out by years of sanctions and underinvestment.

Halliburton's case is one of several signs that both Caracas and Washington are edging toward normalising a relationship with the US oil industry that has otherwise been governed piecemeal, licence by licence, since 2019.

Slow pace

Yet President Donald Trump's plan to bring American energy companies back into Venezuela's oil sector has yet to produce a single new contract, highlighting the slow pace of a strategy that was expected to rapidly expand production in the South American nation, Axios reported.

The absence of agreements reflects disagreements both within the US administration and across the oil industry over how to revive Venezuela's petroleum sector after the removal of Maduro. While Washington had signalled it would take the lead in reshaping the country's energy industry, negotiations have advanced more slowly than many executives had anticipated.

Large multinational producers have largely adopted a wait-and-see approach, citing political and operational uncertainty, whereas smaller independent drillers have pressed for quicker access to projects, arguing they are better positioned to move rapidly in high-risk environments.

The differing views have been mirrored inside the US government. Supporters of a more aggressive strategy sought an immediate overhaul of state-owned PDVSA's contracting practices to bring them into line with international norms, while officials at the Energy Department backed a phased process developed alongside Venezuelan authorities. The earthquakes that struck the country in June further complicated an already difficult operating environment.

The approach has drawn criticism from former Trump adviser Mauricio Claver-Carone, who argued independent US producers had been disadvantaged while larger companies received preferential treatment. Although officials at the White House reportedly favoured expanding opportunities for wildcatters, the Energy Department's more cautious position shaped the negotiations. The State Department has since encouraged Venezuela's interim administration to move forward with additional agreements, which people familiar with the process expect could be signed before month-end.

Energy Department officials dispute claims that they have slowed the reopening of the sector, saying they are working with companies of every size while helping reform Venezuela's hydrocarbons framework and supporting higher production and exports.

Is Halliburton a test case?

Halliburton had operated in Venezuela since 1938 until the first administration of Donald Trump ordered it to suspend operations, said Guacamaya. Halliburton assets in Venezuela have been assessed at $6.6mn. They were to be auctioned off to satisfy non-payment of severance benefits, said the local outlet.

The Supreme Court ruling may clear the way under Venezuelan law for companies such as Halliburton to participate in the country's oil sector, but any return to Venezuela by the US oilfield services company remains contingent on compliance with OFAC's licensing regime and its General Licence 46. The ruling itself does not authorise US companies to resume operations.

Chevron pumps a quarter of Venezuela's oil 

Chevron is by far the most active US company on the ground: it is the only one currently allowed to actually produce and export Venezuelan crude, rather than just secure its existing assets. Chevron's joint venture with state-run oil company PDVSA produces around 250,000 barrels per day (bpd), roughly a quarter of Venezuela's total output, and its Gulf Coast-friendly sour crude has made it the biggest single beneficiary of Washington's selective licensing.

Chevron's own licence was revoked by the Trump administration in May 2025, only to be restored and expanded once Maduro was ousted: its exports to the US climbed from 100,000 bpd in December to 230,000 bpd in January and a planned 300,000 bpd in March, Reuters has reported. Chief executive Mike Wirth has said the company could lift Venezuelan output by a further 50% within 18-24 months if Washington approves it. 

In another sign of a slow normalisation, Chevron said it expects to recover all outstanding debt owed by the Venezuelan government by early 2027, chief financial officer Eimear Bonner told investors during the company's earnings call on July 31, signalling continued progress under the US-approved framework governing its operations in the country, EFE reported.

Bonner said the Houston-based producer continues to recover outstanding receivables while holding discussions with the administration of Rodríguez aimed at securing more favourable tax terms. The company has refrained from committing fresh capital to the country since the capture Maduro, instead waiting for taxes and royalties on crude production to be reduced.

CEO Mike Wirth said in an interview with Bloomberg TV that Chevron is limiting investment to cash generated by its Venezuelan operations. Those funds are being recycled under a US Treasury Department programme that allows the company to recover debt accumulated by PDVSA.

While neither Chevron nor Venezuelan authorities have disclosed the amount still outstanding, industry publications estimated PDVSA's debt to the company at about $1bn in 2022. The liabilities stemmed from years in which the state producer failed to meet its share of costs in joint ventures operating in the Orinoco Oil Belt.

Bonner also said Chevron's three partnerships with PDVSA are performing "successfully", with combined crude production rising 15% over the past three months to an average of 280,000 barrels a day.

The oilfield-services queue 

Halliburton, Schlumberger (now SLB), Baker Hughes and Weatherford International were confined for years to a narrow OFAC authorisation - General License 8N, which the US previously extended to that same group of companies - letting them merely preserve and secure existing assets rather than drill, process or trade Venezuelan crude.

Halliburton's supreme court case marks the first sign of a Venezuelan court, rather than Washington, forcing the pace on actually letting one of them back to work. Two commodity trading houses, Vitol and Trafigura, separately won US licences in January to export Venezuelan crude to the US and other markets - Reuters reported at the time that this gave Chevron its first real competition for control of the country's oil exports in years. 

Joint ventures

This comes as Venezuela is pressing ahead with the overhaul of dozens of oil joint ventures under its new hydrocarbons framework, even as outstanding permits and ancillary agreements continue to slow the completion of projects, Reuters reported.

The oil ministry had targeted July 28 to complete the migration of existing ventures to the revised contractual regime, but companies are still navigating a series of technical requirements, including a weighted royalty formula for developments combining mature producing fields with new acreage, alongside project-specific tax arrangements.

The return of commercial flights following last month's twin earthquakes has enabled oil executives to travel to Venezuela to negotiate revised contracts and finalise agreements for companies seeking to establish new operations or resume activity in the country.

Although Caracas has not formally postponed the migration deadline, officials have told companies they may complete supplementary agreements after signing their principal contracts, sources said.

Industry associations representing foreign firms had requested an extension earlier this month, but the government rejected the proposal, maintaining that most ventures had already made significant progress. The hydrocarbon reform approved in January gave companies 180 days to adapt existing projects to the new legal framework.

Some companies, including Italy's Eni, have favoured production-sharing agreements for new developments rather than traditional joint ventures, aiming to simplify administrative procedures and secure more flexible operating terms.

Other investors remain concerned that unresolved issues related to outstanding debt and previous investment obligations could jeopardise their existing projects.

While authorities have not imposed a deadline for new entrants to sign contracts, both Caracas and Washington are encouraging companies to commit capital as part of a US-backed $100bn programme to rebuild Venezuela's energy industry.

National output is climbing off the floor 

Venezuela's oil production averaged just 800,000-850,000 bpd in 2025, a fraction of the roughly 3.5mn bpd it pumped at its 1990s peak. Output initially fell further still soon after Maduro's removal, as a US blockade limited imports of the diluent Venezuela needs to process its heavy crude and blocked some export tankers from reaching the country.

Oxford Economics estimates production could double to 2mn bpd by 2028 if sanctions are fully lifted and US firms allowed to operate freely, though further gains beyond that would require $15bn-$20bn in fresh investment - and PDVSA said in April that national output had already recovered to 1.1mn bpd.

Opposition leader Maria Corina Machado has floated a far more ambitious target of 5mn bpd with $150bn of investment.

The Trump administration has so far sidelined her in favour of Rodriguez, the former Maduro deputy tasked with carrying out a three-phase transition plan that US secretary of state Marco Rubio outlined soon after the former leader’s capture.

That plan has so far produced legislation aimed at opening up the country's oil and mineral riches to US investors, accompanied by timid openings on civic and media freedoms. 

July output

That’s although crude exports in fact declined modestly in July after reaching a two-year high earlier in the quarter, although deliveries to the US climbed to their strongest level since early 2019, underscoring the shift in trade flows following January's agreement between Washington and Caracas, Reuters reported.

The country shipped an average of 1.16mn bpd last month, down from 1.2mn bpd in June, as fewer volumes were released from onshore and floating storage. Even so, cargoes bound for the US rose to about 786,000 bpd, extending a steady increase from roughly 284,000 bpd recorded in January.

Venezuela's overseas sales have recovered sharply this year after US sanctions and a naval blockade severely restricted exports. A supply accord reached in January with the Rodríguez administration reopened access to the US, Europe and India, with international trading houses playing a central role in moving Venezuelan crude.

While overall exports slipped for a second consecutive month from the 1.24mn bpd reached in May, shipments to other key destinations weakened. Exports to India dropped to around 178,000 bpd from 277,000 barrels a day in June, while deliveries to Europe declined to about 82,200 bpd from 99,000 bpd.

Exports handled by Chevron were little changed at approximately 293,000 bpd. Meanwhile, trading companies including Vitol, Trafigura and Novum Energy shipped about 604,000 bpd, below the 775,000 bpd exported a month earlier.

State oil company PDVSA resumed direct crude cargoes to Spain’s Repsol as part of debt repayment arrangements and intends to send a similar shipment to Maurel & Prom this month. 

Venezuela also increased exports of oil products and petrochemicals to 324,000 tonnes in July from 224,000 tonnes in June, while importing around 81,000 bpd of heavy naphtha used to dilute its extra-heavy crude.

What’s next?

Talks with a faction of the opposition on a potential political transition are due to start soon, but they exclude Machado and are likely to drag on for months, providing little certainty to oil investors in the short term. The uncertainty compounds a country already reeling from the earthquakes, which largely spared oil infrastructure but killed at least 6,000 people and caused an estimated $37bn in damage, according to the UN.

Venezuela holds the world's largest proven oil reserves, an estimated 303bn barrels concentrated in the Orinoco Belt, but the crude is unusually sour and high in sulphur and toxic metals, and the country's refining and transport infrastructure is in such poor repair that The Economist has put the cost of modernising it at $110bn.