We have been closely monitoring developments in Venezuela following the capture of former President Nicolás Maduro and the installation of Delcy Rodríguez as Interim President. The Trump Administration has characterized the removal of Maduro on January 3 as a law enforcement mission supported by a military operation. Since then, the U.S. government has begun to clarify its plans for Venezuela, which are expected to include three phases: stabilization, recovery, and transition.
During the current stabilization phase, the United States will maintain a robust military presence offshore Venezuela to quarantine oil shipments, and engage with previously Maduro-allied authorities, including Interim President Delcy Rodríguez, to restart oil production in Venezuela, including the export of 30 to 50 million barrels of oil to the United States for refining and export.
In support of these efforts, President Trump issued an Executive Order (“E.O.”) on January 9, 2026 that, among other things prohibits, absent licensing, the attachment or imposition of other judicial processes against revenue from such oil sales held in accounts controlled by the U.S. Department of the Treasury on behalf of the Government of Venezuela or revenue generated from the sale of diluents to the Government of Venezuela in support of the production of such oil.
The E.O. further delegates authority to the Secretary of State to use the funds “for public, governmental, or diplomatic purposes . . . on behalf of the Government of Venezuela.” Notably, the E.O. provides that the relevant funds would “serve public sovereign purposes, including compliance with international obligations, the performance of government functions, and the maintenance of diplomatic and foreign policy objectives.” It remains unclear whether this reference to compliance with “international obligations” contemplates payment of investment awards rendered against the Republic of Venezuela.
Subsequent phases will include opening Venezuelan markets to U.S. and Western companies, promoting national reconciliation, and eventually advancing a fuller transition. The estimated timelines of each of these phases have not yet been publicly announced, and the metrics are still under development.
Given the U.S. government’s recognition of (i) the 2015 democratically elected Venezuelan National Assembly (currently in exile) as the only legitimate branch of the Government of Venezuela, and (ii) Edmundo González (also in exile) as President-Elect of Venezuela, it is still unclear whether the Trump Administration will formally recognize Delcy Rodríguez — who served as Maduro’s Vice President — as Interim President in Venezuela. This raises important questions regarding the legality of potential agreements between foreign companies and the interim government in Venezuela or abroad.
Some reports suggest that the Trump Administration is considering some control over Venezuela’s state-owned oil company Petróleos de Venezuela, S.A. (“PdVSA”). A decision to move in this direction could add further complexity to an already very complex picture.
Notwithstanding these developments, existing U.S. sanctions against Venezuela or its government — described below — limit the ability of U.S. companies to resume or expand their operations in the country. At present, the United States has not taken any action to relax or rescind any of these sanctions. A “Fact Sheet” issued by the Department of Energy on January 7, 2026 states that “[t]he United States is selectively rolling back sanctions to enable the transport and sale of Venezuelan crude and oil products to global markets,” and Secretary of the Treasury Scott Bessent has reportedly signaled that certain sanctions could be eased as soon as this week, though no easing of specific sanctions measures has been publicly announced.
As a practical matter, the Administration may not be prepared to fully relax sanctions against Venezuela while the situation on the ground remains dynamic. Rather, we think that it is more likely that the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) may issue targeted general licenses authorizing certain activities involving Venezuela — e.g., related to the transport and sale of certain Venezuelan crude and oil products or exports to Venezuela needed to support crude production — as well as specific licenses authorizing certain transactions related to the oil sector, before any broader sanctions relief.
Such a phased approach would be broadly consistent with the approach the U.S. government has historically taken in winding down sanctions programs, such as with respect to the lifting of the comprehensive sanctions targeting Sudan and Syria. However, we note that the U.S. sanctions against Venezuela could be lifted unilaterally by the Administration without the need for Congressional approval, and thus the sanctions situation could change quickly, with little advance notice. Indeed, given the extraordinary nature of the situation in Venezuela and the unorthodox approach the Trump Administration sometimes takes, there is certainly no guarantee that the Administration will feel constrained by such precedents.
Although the Administration has been focused on revitalizing Venezuela’s energy industry, it has also offered some hints on other industries that may benefit from early U.S. measures during the initial stabilization phase. Following the announcement of the deal for Venezuela to provide oil to the United States, President Trump announced that the proceeds from the sale of this oil may be directed to purchases of U.S. agricultural products, medicines, medical devices, and electrical equipment.
The United States has not imposed comprehensive sanctions against Venezuela. Instead, through various E.O.s implemented through the Venezuela Sanctions Regulations (“VSR,” 31 C.F.R. Part 591), the current sanctions prohibit (and have prohibited in largely the same form since 2019) certain dealings by “U.S. persons” with or involving Venezuela. The term “U.S. person” under the VSR includes: (i) U.S. citizens and lawful permanent residents (so-called “green-card holders”) wherever located or employed; (ii) entities organized under U.S. law, including their foreign branches; and (iii) any person physically present in the United States.
Specifically, U.S. persons are prohibited, absent OFAC licensing, from transactions directly or indirectly involving, or dealings in the property of, the Government of Venezuela (which is defined broadly, including entities owned or controlled by the Government of Venezuela) and individuals and entities that are subject to property-blocking sanctions by virtue of designation to the OFAC List of Specially Designated Nationals and Blocked Persons (“SDN List”) — such as PdVSA, the Central Bank of Venezuela, former President Nicolás Maduro, Interim President Delcy Rodríguez, current President of the National Assembly Jorge Rodríguez, current Interior Minister Diosdado Cabello, and current Defense Minister Vladimir Padrino López — and entities owned 50% or more, directly or indirectly, individually or in the aggregate, by such sanctioned persons. The sanctions also prohibit U.S. persons from approving or otherwise facilitating activities by non-U.S. persons that are prohibited as to U.S. persons.
Additional E.O.s implemented through the VSR prohibit U.S. persons, absent OFAC licensing, from engaging in transactions or dealings in certain debt, bonds, equity, and dividend payments of PdVSA and the Government of Venezuela. Additionally, U.S. persons are prohibited from engaging in transactions or dealings involving cryptocurrency issued by the Government of Venezuela.
Finally, we note that a number of individuals and entities in Venezuela have been designated to the SDN List pursuant to sanctions authorities other than those targeting Venezuela, including authorities targeting terrorist organizations, transnational criminal organizations, and narcotraffickers. It seems unlikely that these designations would be impacted/lifted, even as a result of recent events.
In addition to U.S. sanctions, companies considering potentially resuming or expanding their operations in Venezuela are exposed to the risk of interacting with organizations designated by the United States as FTOs. Last year, the U.S. Department of State designated two Venezuelan criminal organizations, Tren de Aragua and Cartel de Los Soles, as FTOs. The United States had also previously designated Colombian criminal organizations that are known to operate in Venezuela, including the Ejército de Liberación Nacional (“ELN”) and Segunda Marquetalia.
U.S. criminal laws operate independently from U.S. sanctions. The Antiterrorism and Effective Death Penalty Act (“AEDPA”) makes it a federal crime to knowingly provide, or attempt or conspire to provide, “material support” to a designated FTO. These provisions can apply to a broader array of conduct than sanctions prohibitions.
In addition to the criminal enforcement risks, companies also face potential civil litigation exposure in the United States under the Antiterrorism Act and potential reporting obligations under Section 13(r) of the Securities Exchange Act of 1934.
In this regard, the presence of designated FTOs in Venezuela creates potential compliance, litigation, and criminal enforcement risks that go beyond sanctions. These risks can arise not only from direct dealings with the criminal organizations, but also from everyday business activities where cartel involvement is less immediately apparent.
We would be happy to discuss any of these points or the potential impacts of recent events.
If you have any questions concerning the material discussed in this client alert, please contact members of our Latin America practice.
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