President Trump announced on Friday an unprecedented deal where the U.S. has secured majority control of 65 billion barrels of Venezuela's proven oil reserves, roughly 20% of the nation's total, through a partnership with a private business. This initiative aims to revive Venezuela's struggling energy industry and provide a new source of crude for U.S. refineries, potentially lowering U.S. fuel prices. The agreement, spanning 25 years, involves the development of 17 oil fields, primarily in the Orinoco Belt and Lake Maracaibo region.
While Trump suggests the deal will bring down U.S. fuel prices, experts are skeptical about any near-term impact. Venezuela's oil infrastructure is in severe disrepair due to years of mismanagement, and significant investment is required to ramp up production. Rystad Energy estimated in January that approximately $180 billion would be needed through 2040 to return Venezuela to its peak production. Secretary of State Marco Rubio stated the deal would attract nearly $100 billion in private-sector investment, with North American Blue Energy Partners planning to borrow up to $5 billion to increase its output to 1 million barrels in the next five years.
The deal gives the U.S. a 55% effective output from the new private company, including an ownership stake and rights to purchase oil at cost. These American purchases are intended for the U.S. Strategic Petroleum Reserve and military use. The new company is projected to become the second-largest corporate holder of proven reserves after Saudi Aramco. However, the identity of the private operator involved remains largely undisclosed, and many critical details, including how the U.S. stake breaks down and who covers the necessary investments, are unclear. Chevron is currently the only major U.S. oil company active in Venezuela, with its production in the country increasing 15% this year to 280,000 barrels per day, and projections to grow up to 50% by 2028.
Experts like Goldwyn and Lipow warn that production growth will be constrained by infrastructure limitations, including export terminals where tankers already face up to 30-day delays. Even with substantial investment, fields in the Orinoco Belt, lacking infrastructure, could take five to seven years to deliver increased production. The deal's legality and long-term viability are also questioned, particularly by critics like Harvard professor Ricardo Hausmann, who called it a "shameful deal" and doubted its respect among Venezuelans or major U.S. oil companies due to political instability and the lack of constitutional power of the interim government to commit to such an agreement. Venezuelan interim President Delcy Rodriguez stated that Venezuela retains ownership and sovereignty over its resources and aims to strike similar deals with other transnational companies like Repsol and Shell.
