Trump Seizes Control of Venezuelan Oil Reserves

President Donald Trump announced on Sunday that the United States will take control of 65 billion barrels of Venezuelan oil reserves, marking a significant shift in U.S. energy policy and international relations. The deal, negotiated by Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, and acting Venezuelan President Delcy Rodriguez, grants the U.S. majority control over Venezuela's vast oil resources.

According to Reuters, current production in Venezuela amounts to just over 1 million barrels per day, with many fields being new and having a break-even price of $80 a barrel on key greenfield sites. Trump stated that the agreement would substantially lower gas prices for all Americans and announced that crude oil from Venezuela would be used to fill up the U.S. Strategic Petroleum Reserve, which held about 290 million barrels as of August 21, near a 44-year low (Al Jazeera). However, Reuters reported that the U.S. strategic petroleum reserve cannot store the heavy oil from Venezuela due to facility limitations.

The deal involves the development of 17 strategic oil fields with an initial production target of 1.5 million barrels per day (Al Jazeera). Rodriguez claimed that $19 from every barrel of oil produced and sold to the U.S. will flow to Caracas, an arrangement that could be worth $209 billion per year to Venezuela (Los Angeles Times). The U.S. government plans to take a 35% passive stake in North American Blue Energy Partners and secure preferential rights to purchase 20% of the company’s production at cost, according to the Wall Street Journal (HuffPost).

Venezuela has around 1 trillion barrels to extract, mostly in the Orinoco Oil Belt, which is undeveloped. Large amounts of capital will be required to drill in the jungle, build pipelines, source light hydrocarbons, and secure ships for transport (Reuters). U.S. refiners on the Gulf of Mexico are already operating at about 95% of capacity.

Rodriguez defended the government's energy deal with Donald Trump, claiming that it would help Venezuela develop its economy and earn revenues of more than $209 billion (The Guardian). She insisted that Venezuela's sovereignty is secure and said she wants the country to become a global energy powerhouse (PBS).

An unprecedented deal for the U.S. to gain access to a fifth of Venezuela's oil reserves, and the central role Venezuelan businessman Alejandro Betancourt will play, has prompted questions from some oil companies evaluating potential investments in the country (Reuters). Oil majors and large foreign companies negotiating contract migrations want assurance they won't be seated at the same table with Betancourt.

NABEP, which produces around 170,000 barrels of oil a day, did not immediately respond to requests for comment. In an emailed company statement after the White House released details of the agreement, Betancourt said that the transaction would 'unleash that potential to the great benefit of both Venezuelans and Americans.'

Others may be more cautious, illustrating the uphill battle President Donald Trump faces to convince major U.S. oil companies, particularly ExxonMobil and ConocoPhillips, to invest in Venezuela and quickly expand the country's oil production.