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See the full story · 20 sourcesWashington has been trying to secure a stable flow of Venezuelan crude for US refineries.
Listen WASHINGTON – US President Donald Trump on Aug 28 announced an unprecedented push to take control of a fifth of Venezuela’s vast oil reserves , betting that American companies can revive the OPEC nation’s battered energy industry while delivering a new source of crude to help bring down US fuel prices.
Trump provided few details about the agreement, saying only that the US had secured majority control of more than 65 billion barrels of Venezuela’s proven oil reserves through a partnership with private business.
The South American nation’s leader welcomed the agreement, saying it would boost the economy and government revenue.
The new deal would represent a dramatic expansion of the US role in Venezuela’s oil industry as the Trump administration seeks to revive the country’s production and secure more crude for US refineries.
Venezuela holds the world’s largest proven oil reserves but produces only about 1.25 million barrels per day, far below its potential after years of underinvestment, mismanagement and sanctions.
“At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with highly respected interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority US control of more than 65 billion barrels of proven oil reserves in Venezuela, at no cost to the American taxpayer,” Trump wrote on his Truth Social network.
The announcement followed weeks of US-Venezuelan negotiations over a deal that would give American companies long-term access to a group of Venezuelan oil fields and guarantee the resulting crude supply to the US.
Venezuelan officials are preparing to sign agreements next week granting new oil exploration and production rights to a number of companies, particularly US firms.
Sources have told Reuters that a lease model was under consideration, with fields potentially auctioned to US producers, but the arrangement could face legal and constitutional challenges in Venezuela, where the state retains control over core oil industry activities.
Trump did not disclose the structure of the agreement, the fields or companies involved or how the US would exercise majority control over the reserves.
Rubio described the agreement as a win for both countries, saying on social media platform X that it would secure stable, low-cost oil for the US and help lower petrol prices.
For Venezuela, Rubio said the deal would bring nearly US$100 billion (S$127 billion) in private investment, support thousands of high-paying jobs and help rebuild the country’s economy.
Rodriguez, who became interim leader after the US seized President Nicolas Maduro in January, said late on Aug 28 that the agreement would allow for a significant increase in production through the development of 17 strategic fields and result in tax revenue for the country totalling US$209 billion.
“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,” she said in a statement.
Analysts said they needed to see more details on the agreement’s legal and financial structure before assessing whether it could attract significant investment.
Also unclear is whether the deal will lower petrol prices in the short term, as developing the infrastructure needed to produce, transport and refine Venezuela’s heavy crude could take years.
David Goldwyn, president of Goldwyn Global Strategies, said it was unclear whether a US government lease would have a legal basis under Venezuela’s Constitution and its new hydrocarbons law, adding that there is “no precedent for having the US government enter into a lease to operate oil fields”.
Goldwyn also questioned whether the plan would address the obstacles that have deterred investment in Venezuela for years.
“It is hard to see how this kind of arrangement would accelerate investment at any material scale,” he said, citing political uncertainty, an inadequate power grid, limited export capacity and government discretion over the industry.
Since removing Maduro, Washington has been trying to secure a stable flow of Venezuelan crude for US refineries while promoting American investment in the country’s oil industry.
The Trump administration is under pressure ahead of midterm elections in November to mollify consumer concerns over rising petrol prices. Cheaper oil supplies and expanded output could help.
The US also has been looking for solutions to replenish its Strategic Petroleum Reserve, the nation’s oil stockpile, including the possibility of crude swaps with US producers.
Venezuela nationalised its oil industry in the 1970s, putting state-run PDVSA at its centre.
Under then President Hugo Chavez, the government tightened control, forcing foreign producers into state-led joint ventures and later expropriating assets, including projects operated by ExxonMobil and ConocoPhillips.
Under Maduro’s rule, Venezuela’s production fell sharply. REUTERS
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