What we know about the US-Venezuela oil deal

President Trump announced a new oil deal with Venezuela on Friday that would give the US a stake in a private company with rights to a major portion of Venezuela’s oil fields, which contain world’s largest proven crude reserves.

Trump, whose social media post called it “THE BIGGEST OIL DEAL IN WORLD HISTORY,” said the agreement is part of an effort by his administration to secure more oil and help lower gas prices for Americans.

Quick background: President Trump has pushed American oil companies to invest in Venezuela since January, when the US removed previous President Nicolás Maduro from power and installed interim President Delcy Rodríguez.

• So far, ExxonMobil, ConocoPhillips and others have held back, citing concerns about Venezuela’s aging oil infrastructure and whether their investments would be protected if Venezuela’s political environment changes.
• Venezuela currently produces just ~1.1 million barrels of oil/day, roughly as much as North Dakota, despite its vast proven reserves.

How does the deal work?

The US stake will be in North American Blue Energy Partners, a private oil company that’s Venezuela's second-largest private oil producer behind Chevron. The company is led by local businessman Alejandro Betancourt, who has close ties to interim President Rodríguez.

• The deal would reportedly give the US government a 35% ownership stake in North American Blue Energy Partners via “penny warrants,” meaning the US would only pay a nominal amount.
• America would also get first dibs on buying 20% of the company’s oil production at cost, with the Defense Department ultimately holding both the ownership stake and those purchase rights.

Meanwhile, North American Blue Energy Partners would receive 100-year rights to develop 17 oil fields containing 65 billion barrels of proven reserves, about one-fifth of Venezuela’s total. The Pentagon is expected to help finance the oil venture, which officials say could also attract nearly $100 billion in private investment.

However, legal questions remain

Article 12 of Venezuela’s 1999 Constitution says the country’s oil reserves belong to the state and can’t be sold, leading critics and legal analysts to question whether interim President Rodríguez and her largely unelected government have the authority to grant those rights.

• Oil companies are also worried about what happens if Venezuela gets a new government, since a future administration could challenge the agreement and potentially put past investments at risk.
• Some Venezuelan critics have gone further, accusing the US of helping legitimize Rodríguez’s government in exchange for access to the country’s oil.
• On the US side, there’s also pushback from the oil industry over the government backing a company that could eventually compete with American producers.

Looking ahead… Oil analysts say the process of rebuilding Venezuela’s oil industry, and any potential impact on US gas prices, will likely take years, though it should help drive down prices at the pump in the long run if commitments materialize.

📊 Flash poll: On the whole, do you support or oppose the Trump admin’s new oil deal with Venezuela’s government?

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