17 oil fields, 65 billion barrels: Inside Trump’s Venezuela deal and why it may not lower gas prices anytime soon

The United States has reached an agreement with Venezuela to control the country's vast oil reserves, a deal the White House has touted as the "biggest oil deal in world history". The arrangement envisions doubling the US's oil reserves and lowering fuel prices for citizens. However, the deal's immediate effects on fuel prices remain uncertain.

President Donald Trump, whose approval ratings are at record lows, has used the deal as a tool to address voter concerns about affordability ahead of the US midterm elections in November.

Under the agreement, Venezuela's interim president, Delcy Rodríguez, has granted 100-year concessions to a joint venture between the US government and North American Blue Energy Partners, a private oil exploration and production company. This joint venture aims to develop 17 oil fields, estimated to hold 65 billion barrels of oil.

The US-backed firm, Blue Energy Partners, is led by Venezuelan businessman Alejandro Betancourt López, who has ties with Rodríguez. The Pentagon will take a 35% ownership stake in Blue Energy Partners, while the US government secures 20% of oil at cost and the right to purchase the remaining 80%. Board members of Blue Energy Partners must be US citizens, and the US holds a veto power over the company's board of directors.

While the deal could potentially help Venezuela modernize its energy infrastructure and increase revenue, it's unlikely to bring immediate relief to US fuel prices. The transition would require significant investment, estimated to be between $10 billion to $20 billion to repair and modernize Venezuela's existing oil fields, and potentially up to $100 billion for new oil fields.

Even with this new crude oil supply, refining capacity, which is currently constrained due to issues stemming from the Strait of Hormuz, remains a bottleneck.

The deal's success is contingent on long-term political and financial backing from both countries, and the future durability of the agreement is uncertain. In the US, a new president in 2029 could potentially challenge the deal, and in Venezuela, the historical pattern of nationalizing oil assets could pose a threat to the arrangement, especially under a future administration.

Additionally, Venezuela's heavy crude oil, which is high in sulphur, poses challenges in terms of extraction, transportation, and refining. Despite these hurdles, the deal could provide a much-needed boost to Venezuela's energy sector, but in the short term, the deal's impact is likely to be more political than economic.