America’s murky deal to secure a fifth of Venezuela’s oil

On August 28th, President Trump unveiled what he touted as "the biggest oil deal in world history," claiming it would grant America "majority control" of over 65 billion barrels of Venezuelan crude, which accounts for roughly one-fifth of the nation's substantial proven reserves. While the details were intentionally vague, the president claimed the arrangement would come "at no cost to the American taxpayer."

He referred to the controversial interim Venezuelan leader, Delcy Rodríguez, as the "Highly Respected Interim President of Venezuela," and she reciprocated, expressing her "deepest gratitude" for the deal. Rodríguez stated that the agreement would bolster "our country's economic growth, the energy security of our hemisphere, and greater balance in international markets."

President Trump boasted that the deal more than doubled American oil reserves, though this assertion proved to be misleading. The United States, with a mere 44 billion barrels of reserves, would not own the 65 billion barrels of Venezuelan oil that the new deal permits. Instead, it would become the majority stakeholder in a new company, responsible for developing and operating 17 Venezuelan oil fields distributed across the Orinoco Belt and Lake Maracaibo.

These contracts, potentially lasting up to 50 years with renewable options for another 50 years, could be allocated to various companies or even sub-contracted.

Given the magnitude and size of these oil fields, the new company might not oversee them all directly. Instead, it could contract out the task to other companies or even itself. While the Venezuelan state would have no operational role, it would receive royalties and taxes from the oil production. The U.S. government would effectively serve as a guarantor of these contracts, potentially reducing the risk for American oil companies.

However, several companies had previously endured losses when their joint-venture agreements were altered under the Chávez government in 2007, leaving Trump discontent.

Despite the lack of interest from other oil majors to invest in Venezuela, the new company is set to include a 45% stake held by North American Blue Energy Partners (NABEP), a privately-owned oil producer registered in Barbados with offices in Caracas. NABEP's leader, Alejandro Betancourt, a controversial Venezuelan businessman, has faced several international investigations for alleged money laundering. Betancourt, however, maintains his innocence and has not been convicted of any crime.

While the deal might seem advantageous for American investors, it raises significant concerns regarding legitimacy and long-term viability. The interim leader, Rodríguez, is not a democratically elected official but rather the heir to President Nicolás Maduro, who was accused of stealing the 2024 presidential election. Maduro was removed by American commandos and now faces drug-trafficking charges, but his absence does not necessarily legitimize the deal. As Harvard Professor Ricardo Hausmann put it, "It will be a fiasco for all involved."

Critics argue that the deal could present an opportunity for democratic change, but the Trump administration and Rodríguez's regime have a vested interest in preventing the opposition from returning to power. The opposition leader, María Corina Machado, has been discouraged from returning to Venezuela since leaving for the Nobel Peace Prize ceremony last December.

Only time will tell whether this complex arrangement can break Venezuela's longstanding status as a prominent oil reserve with minimal daily production and investment.