WASHINGTON, Aug 29 (Alliance News): US President Donald Trump has announced an unprecedented agreement under which American interests would take majority control of more than 65 billion barrels of Venezuela’s proven oil reserves, as Washington seeks to expand access to Venezuelan crude and revive the country’s struggling energy sector.
Trump provided few details about the arrangement, saying the United States had secured majority control of the reserves through a partnership with private businesses.
The announcement followed weeks of negotiations between Washington and Caracas over a deal that would give American companies long-term access to Venezuelan oilfields and increase crude supplies to the United States.
Venezuelan officials are preparing to sign agreements next week granting new exploration and production rights to several companies, particularly US firms.
A lease model has reportedly been under consideration, under which oilfields could be auctioned to US producers. However, the arrangement could face legal and constitutional challenges in Venezuela, where the state retains control over key parts of the oil industry.
Trump did not disclose the structure of the agreement, the specific oilfields or companies involved, or how the United States would exercise majority control over the reserves.
A list seen by Reuters showed that the fields involved are located in Venezuela’s Orinoco Belt and Lake Maracaibo regions.
Secretary of State Marco Rubio described the agreement as beneficial to both countries, saying it would provide the United States with stable and low-cost oil supplies and could help reduce gasoline prices.
For Venezuela, Rubio said the agreement would attract nearly $100 billion in private investment, create thousands of high-paying jobs and support efforts to rebuild the country’s economy.
Venezuelan interim leader Delcy Rodriguez said the agreement would allow a significant increase in oil production through the development of 17 strategic fields.
She said the projects could generate around $209 billion in tax revenue for Venezuela.
“These investments will contribute not only to the recovery and modernisation of our industry, but also to our country’s economic growth, the energy security of our hemisphere, and greater balance in international markets,” Rodriguez said in a statement.
However, analysts have raised questions about the legal basis, financial structure and practical viability of the agreement.
David Goldwyn, president of Goldwyn Global Strategies, said it remained unclear whether a US government lease would be permitted under Venezuela’s constitution and new hydrocarbons law.
He also noted that there was no clear precedent for the US government entering into a lease to operate oilfields in another country.
Goldwyn questioned whether the arrangement would overcome the challenges that have discouraged investment in Venezuela’s oil sector for years, including political uncertainty, an unreliable power grid, limited export capacity and government control over the industry.
Venezuela has the world’s largest proven oil reserves but currently produces around 1.25 million barrels per day, significantly below its potential after years of underinvestment, mismanagement and sanctions.
The development of infrastructure required to produce, transport and refine Venezuela’s heavy crude could also take years, raising questions over whether the agreement would have an immediate impact on US gasoline prices.
Washington has been seeking to secure a stable supply of Venezuelan crude for US refineries while encouraging American investment in the country’s energy industry.
The Trump administration is also facing pressure ahead of November’s midterm elections to address concerns over rising fuel prices.
The United States has separately been exploring options to replenish its Strategic Petroleum Reserve, including possible crude oil swaps with domestic producers.
Venezuela nationalised its oil industry in the 1970s, placing state-run PDVSA at the centre of the sector. Under former President Hugo Chavez, the government further tightened control over the industry and forced foreign producers into state-led joint ventures before later expropriating assets operated by companies including ExxonMobil and ConocoPhillips.
Under former President Nicolas Maduro, Venezuela’s oil production declined sharply amid economic turmoil, sanctions and years of underinvestment.
