A massive oil deal was signed in Caracas, granting a US-led company 100-year concessions over 17 oil fields in Venezuela, encompassing 65 billion barrels of crude, which represents over a fifth of the country's proven oil reserves. This agreement, touted by President Trump as the "biggest oil deal in world history," is expected to generate $100 billion in investment and more than $200 billion in tax revenue, according to interim Venezuelan President Delcy Rodríguez.
However, the deal has drawn significant criticism and skepticism. Elliott Abrams, former special representative for Venezuela, called it a "terrible deal," arguing that it gives away 20% of Venezuela's national patrimony for nothing. Energy experts warn that due to the dire state of Venezuela's oil sector, the promised profits within two to three years are unrealistic, with a decade being a more likely timeframe. Luis Pacheco of the Baker Institute at Rice University estimates that Venezuela needs about $100 billion in investment over eight years just to return to its previous oil production levels.
Legal and constitutional questions also plague the agreement. Economist Francisco Monaldi noted discrepancies between announcements from Washington and Caracas, particularly regarding the deal's duration (100 years according to Washington, 25 years according to Venezuela). He also highlighted that much of what Trump stated about the agreement could be illegal or unconstitutional under Venezuelan law. Rafael Quiróz, an oil economist at the Central University of Venezuela, described the deal as a "monstrosity" that violates both the Hydrocarbons Law and the Constitution, as PDVSA's assets cannot be transferred.
The deal's long-term viability is further clouded by the involvement of controversial Venezuelan businessman Alejandro Betancourt and his company, NABEP, raising concerns about the company's capacity to develop the fields and the viability of selling oil to the US at cost. Ricardo Hausmann, a former planning minister, criticized the deal as "corrupt and predatory," suggesting it would hinder Venezuela's economic recovery. Analysts also point to significant political risks, with uncertainty about whether a future US or Venezuelan government would uphold the agreement, making it problematic for long-term investors. Despite these concerns, some analysts acknowledge the potential opportunities arising from such a large volume of investment, even amid the deal's inconsistencies.
The US aims to use this deal to secure access to Venezuela's oil reserves, which are more than double America's own, and potentially replenish its Strategic Petroleum Reserve (SPR). However, challenges remain, including the heavy nature of Venezuelan oil being unsuitable for the SPR's quality standards, the need for significant infrastructure investment ($180 billion by 2040 according to Rystad Energy), and the requirement for Congressional approval for SPR purchases. Experts like Goldwyn believe the deal will have no immediate impact on US gasoline prices or Venezuelan production for years to come, with increased output from the Orinoco Belt fields taking five to seven years to materialize.
