Venezuela has given more details about its new oil deal with the US, after President Donald Trump said the agreement would put a large part of Venezuela’s oil reserves under majority US control. Venezuelan interim President Delcy Rodríguez explained the deal in a late-night address on state television channel VTV.
The agreement will run for 25 years, according to Rodríguez. It covers the development of 17 strategic oilfields in Venezuela. The oilfields have a production target of more than 1.5 million barrels of oil per day. Rodríguez stressed that this target applies only to the oil production covered by the bilateral US-Venezuela agreement, according to The Hill.
Venezuela oil production
The deal is aimed at bringing Venezuela’s oil industry back to higher production levels. Rodríguez said the agreement could help revive the Venezuelan economy and increase money flowing into the government. Venezuela will provide the oil and its existing industry and workers. Rodríguez said the country is contributing more than 100 years of experience in the oil industry, along with its oil resources and infrastructure.
Deep Dive
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{{/usCountry}}The US will provide the money and technology. Rodríguez said American capital, technology and operating expertise will be used to recover and develop Venezuela’s oil assets. Venezuela expects to get several economic benefits from the deal. Rodríguez said these include oil production, new jobs, investment in infrastructure, higher government revenue and more business for local industries.
Venezuela $209 billion revenue
Venezuela will receive $19 for every barrel of oil produced and sold to the US under the agreement. Rodríguez said this payment structure could generate an estimated $209 billion a year for Venezuela. The agreement uses a benchmark oil price of $65 per barrel.
Rodríguez said the actual price could change depending on global oil prices, according to The Hill. The deal covers oil reserves of about 65 billion barrels, according to the figures discussed by the Venezuelan government and Trump. Venezuela has much larger total proven oil reserves, however.
Venezuela has about 303 billion barrels of proven oil reserves in total, according to the US Energy Information Administration (EIA). The reserves covered by the deal therefore represent roughly 21% of Venezuela's total proven reserves, based on the figures provided. Rodríguez said Venezuela will still own its natural resources. She said the agreement does not mean Venezuela is giving up ownership of its oil reserves.
Rodríguez also stressed that Venezuela will keep its sovereignty over its natural resources. She said the country is only using foreign capital, technology and operational expertise to rebuild an oil industry that has been badly damaged by years of sanctions.
Trump US oil control
Trump described the agreement in much stronger terms. On Friday, he called it “THE BIGGEST OIL DEAL IN WORLD HISTORY!” in a post on Truth Social. Trump said the US had secured majority control of more than 65 billion barrels of proven Venezuelan oil reserves. He also said the deal would come at no cost to American taxpayers.
The agreement involves long-term access to major Venezuelan oilfields. A US official previously told The Hill that Rodríguez granted a joint venture involving the US government and a private Venezuelan operator 100-year concessions for oilfields containing about 63 billion barrels of proven reserves.
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Iran conflict and oil prices
The oil deal comes after a major change in US-Venezuela relations. Trump began directly engaging with Venezuela over its oil after US forces captured Venezuelan President Nicolás Maduro in January. The US has a strong reason to push for more Venezuelan oil production right now: energy prices are rising. The pressure has increased because of the conflict with Iran.
The Iran conflict has disrupted oil exports through the Strait of Hormuz. The waterway is extremely important to the global oil market because roughly one-fifth of the world's oil normally travels through it. More Venezuelan oil could therefore help increase global supplies at a time when the US and other countries are facing energy pressure. The planned production target of more than 1.5 million barrels per day makes the Venezuelan deal especially important for the oil market.
Democrats oppose Venezuela oil deal
The deal has also faced criticism from US Democrats. Sen. Chris Van Hollen, a Maryland Democrat, was among the lawmakers who opposed the agreement. Van Hollen said the deal was not a win for the US. He argued that Trump had put American service members at risk in order to secure Venezuelan oil for wealthy private interests, according to The Hill.
Van Hollen also questioned the use of US military power for the deal. He said putting American soldiers' lives at risk for private profit was a serious failure of Trump's constitutional responsibilities. The biggest questions around the deal are now about control, money and production. Trump says the US has secured majority control over a huge amount of Venezuelan oil reserves, while Rodríguez says Venezuela will retain ownership and sovereignty over its natural resources.
The deal's success will ultimately depend on how quickly the 17 oilfields can be developed and how much oil they can actually produce. The current target is more than 1.5 million barrels per day, while Venezuela is expecting about $209 billion a year in revenue based on the deal's stated payment structure.