Donald Trump and his administration have struck a deal that will give the United States a 55% equity stake in a new Venezuelan oil company, granting control of 65 billion barrels of proven reserves, the world's second-largest after Saudi Aramco. The move follows a 100-year lease granted by interim president Delcy Rodriguez to a private Venezuelan operator.
Background to the US Venezuela oil partnership
Venezuela holds the largest oil reserves on the planet, estimated at 303 billion barrels. By contrast, the United States, the world's biggest oil producer, does not have a state-owned oil champion and relies on private firms such as Exxon Mobil and Chevron. The Trump administration's agreement aims to change that by creating a joint venture that will be the world's second-largest corporate holder of proven reserves.
Structure of the joint venture
The 100-year lease covers prime oil fields. Under the terms, the United States will control 55% of the company's effective output through equity ownership and production rights, while the private Venezuelan operator retains the remaining share. Rodriguez said the arrangement would bring in more than $100 billion of investment and generate $209 billion for the Venezuelan government.
Implications for global oil markets
U.S. officials say the new venture could help replenish the Strategic Petroleum Reserve, which has fallen to its lowest level since 1982. However, Venezuela's oil sector is in disrepair, producing only 1.1 million barrels a day, far below its 20-year-ago peak of 3.5 million barrels. Restoring output to previous levels would require billions of dollars in investment and several years.
Major oil companies are watching cautiously. Sources say Chevron is close to expanding its long-standing operations in Venezuela, while Halliburton is in talks to supply equipment. Italy's Eni has also announced cooperation with Venezuelan authorities to revitalise the sector.
"For sure, and if Venezuela ever gets anything resembling a democratic government, the very first thing it will do is flush Trump's deal down the toilet," posted senior economist Dean Baker on X.
Energy experts remain skeptical about how much private capital will flow into the country, given past nationalisations and ongoing political uncertainty. The success of the venture will depend on the ability of investors to secure stable, long-term contracts in a market that has been volatile for years.