Trump said the agreement announced Friday night would give the United States a stake in Venezuela’s vast oil reserves, a step toward his goal of extracting energy from the country after American forces captured then-President Nicolás Maduro in a middle-of-the-night raid in January and brought him to New York to face federal drug trafficking charges.
Venezuela’s acting president, Delcy Rodríguez, described the deal as a step toward economic recovery that will modernize the country’s oil industry.
But the answers to many questions, including how soon the reserves could be drilled and who will pay to make it happen, were not immediately clear. No text of any agreement has been released.
What are the terms?
The U.S. government and an unnamed private operator in Venezuela formed a new company that was given the rights to untapped oil fields for 100 years.
A statement from Rodríguez said the deal involves the development of 17 fields with a proven potential of 65 billion barrels. It said the agreement could draw $100 billion in investment into Venezuela’s oil industry and yield over $209 billion in taxes for Caracas.
Trump said the agreement was negotiated by Secretary of State Marco Rubio, Defense Secretary Pete Hegseth and Rodríguez.
The deal gives the United States 55% effective output of the new private company, including an ownership stake and rights to buy oil at cost. American purchases of the oil will go toward the U.S. strategic oil reserves along with the military, according to a U.S. official who was not authorized to discuss the matter publicly and spoke on the condition of anonymity.
The company would be the second largest corporate holder of proven reserves after Saudi Aramco, according to the official.
Will gas prices go down?
Probably not any time soon.
Trump says the deal will help lower gas prices for Americans. That is an important objective for the Republican president as the Iran war slows the shipping of Persian Gulf oil and keeps prices elevated months before November elections in the United States.
But experts have repeatedly warned that Venezuela’s dilapidated oil infrastructure will take years and billions of dollars to repair. A substantial boost in production is not expected to happen quickly.
The deal could be “helpful in the long run, but it’s not going to do anything to change the price of gasoline at the retail station for Labor Day weekend,” said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University.
Neither side made clear who would pay for infrastructure investments and at what cost.
The average price of gas in the U.S. stood at about $4.08 a gallon on Saturday, according to AAA. The average price was $3.20 at the same time last year.
Kevin Book, managing director at ClearView Energy Partners, said the oil industry is awaiting clarity on the deal's details. Venezuela has room to increase its oil production, he said — in the past it produced more than 2.5 million barrels a day above current levels — but investments of this scale don't happen quickly.
“It’s going to take time — many years — to deploy that much capital and produce the kind of incremental results that history suggests possible," Book said.
What questions remain?
Many important details remain unclear, including who will cover necessary investments, the identity of the private operator and how America’s stake in the company breaks down.
The U.S. will get 55% of the company's effective output, but it was not clear what portion of that comes from an ownership stake and how much comes from the right to buy oil at cost.
It also is unclear how the industry will react. Persuading big American oil companies to return to the region could prove a challenge given the political uncertainty and damaged infrastructure.
Chevron, the only U.S. oil company actively producing in Venezuela, declined to comment. Separately from Trump’s announcement, Chevron already had been in talks to expand investment in the country. Exxon Mobil also declined to comment.
David Oxley, chief climate and commodities economist at Capital Economics, said that on its face, the deal could double U.S. oil reserves and reduce dependence on crude oil from Canada and Mexico. But Oxley, writing in a commentary, cautioned that there are logistical hurdles and said the value of Venezuela's reserves may have been exaggerated under former President Hugo Chavez.
Even with legal and security guarantees, it is not clear that U.S. oil companies “would be eager to invest,’’ he wrote, noting that “there simply might be more enticing commercial opportunities on offer elsewhere.’’
