President Donald Trump's recently announced oil deal with Venezuela, hailed by the White House as the "biggest oil deal in world history," is being met with significant doubt and described as "smoke and mirrors" by some experts. The agreement involves the Pentagon's Office of Strategic Capital acquiring up to a 35% equity stake in North American Blue Energy Partners (NABEP), the second-largest private oil producer in Venezuela. Additionally, the U.S. State Department has the right to purchase 20% of NABEP's Venezuelan oil production at cost, with a right of first refusal for the remaining output, effectively giving the U.S. a 55% stake in the new joint venture.
Despite the Trump administration's claims of securing access to 65 billion barrels of Venezuela's oil reserves for a century, economists and analysts like Francisco Monaldi point out numerous inconsistencies. The U.S. Congress has reportedly deemed the Pentagon's equity stake in NABEP legally problematic. Furthermore, while Trump suggests a 100-year pact and $100 billion in investment, the Venezuelan government has indicated a 25-year term. There are also concerns about the chosen partner, Venezuelan businessman Alejandro Betancourt, and the ability of NABEP, described by Harvard professor Ricardo Hausmann as a "minuscule company," to manage such vast resources without the necessary managerial, technological, or financial capital.
The viability of the deal is further questioned by the condition that NABEP must sell oil to the U.S. at cost, which could deter other investors seeking profitable returns. Long-term investors may also be discouraged by the unconventional negotiation process and lack of certainty regarding contract enforcement. While some analysts acknowledge the potential for investment, given Venezuela's significant need for capital in its oil sector, they also recognize the severe political, legal, fiscal, and execution risks involved. Major U.S. energy companies like ExxonMobil and ConocoPhillips remain hesitant to re-commit capital following costly asset nationalizations under the Chavez regime, with ConocoPhillips still prioritizing recovery of its $10-$12 billion arbitration award. Chevron, while making a $7 billion investment to increase production by 320,000 barrels per day by 2031 through a joint venture, highlights the slow pace of recovery.
Experts do not anticipate a significant short-term increase in Venezuela's oil production from this deal, despite the country's increased exports to 1.2 million barrels per day. The 17 fields awarded to NABEP, along with eight greenfield projects, mean that any substantial rise in output will take considerable time. Infrastructural weaknesses, including ports and a fragile energy grid, also pose constraints. Conservative estimates suggest NABEP's current production from its three joint ventures is around 124,000 barrels per day. Given that average U.S. oil consumption was about 20.6 million barrels per day in 2025, the 20% of NABEP's production promised to the U.S. is considered a marginal contribution, reinforcing the view that the deal is more about political posturing than a practical solution to U.S. energy needs.
