- Trump announces a deal for US control of Venezuelan oil, including a 55% stake in a joint venture and a 100-year lease.
- The 100-year oil field lease will create the world’s second-largest oil company, measured by total reserves, behind Saudi Aramco.
- Venezuela has 303 billion barrels of proven oil reserves, and the newly formed company will control 65 billion of those barrels.
- The US has more than quadrupled crude imports from Venezuela this year, reaching about 600,000 barrels per day.
- Venezuela's oil production has ramped up to about 1.2 million barrels per day since the US captured Maduro.
- Venezuelan oil is heavy, sour sludge, which can be distilled into asphalt, industrial oils, diesel and jet fuel.
- Increased Venezuelan oil imports are important after the Iran war disrupted about a fifth of the world’s oil supply.
- The Hugo Chavez and Maduro regimes allowed oil infrastructure to deteriorate beyond repair, requiring billions of dollars of foreign investment over at least a decade to restore output.
- Venezuela’s new government opened its oil industry to private participation, but without sufficient investor protections, few have been willing to take the risk.
Former President Trump has announced a significant deal that will see the United States take a 55% stake in a joint venture with a private Venezuelan operator, creating the world’s second-largest oil company by reserves.12
The agreement includes a 100-year lease and aims to enhance U.S. oil imports from Venezuela, which have surged to 600,000 barrels per day, making it the No. 2 source of imported oil to the U.S., behind Canada.4
Venezuela boasts 303 billion barrels of proven oil reserves, with the new company controlling 65 billion barrels. This deal could more than double the 46 billion barrels of oil reserves currently controlled by the U.S.3
The U.S. has become a supplier of last resort for many countries, particularly after disruptions in the Middle East. The deal could also aid in restoring America’s Strategic Petroleum Reserve, which has been depleted due to reduced oil exports from the Persian Gulf.
Despite Venezuela's current production of 1.2 million barrels per day, significantly lower than the 3.5 million barrels produced before the late 1990s, the new venture signals a potential revival of the Venezuelan oil industry. “This could be a good thing as the major oil companies are presumably now dealing with a US legal framework which could accelerate investments,” said Andy Lipow, president of Lipow Oil Associates.5
However, experts warn that it will likely take years for additional oil production to materialize, as billions in foreign investment will be necessary to restore Venezuela’s oil infrastructure.
“The deal would give the US control of 65 billion barrels of Venezuela's proven reserves, more than double the 46 billion barrels it already controls. Venezuela's oil production has risen to about 1.2 million barrels per day, but remains far below the 3.5 million before the socialist takeover.”
