In Brief
- Donald Trump says the US has signed an agreement that gives the US a stake in Venezuelan oil reserves.
- The deal has been thrown into question by experts who question its legal and economic validity.
Details are emerging about what United States President Donald Trump is calling "the biggest oil deal in world history" with Venezuela.
Trump said the agreement announced on Saturday would give the US a stake in Venezuela's vast oil reserves, a step toward his goal of extracting energy from the country after US forces captured then-president Nicolás Maduro in a middle-of-the-night raid in January and brought him to New York to face federal drug trafficking charges.
Venezuela's acting president, Delcy Rodríguez, described the deal as a step toward economic recovery that will modernise the country’s oil industry.
In a televised address to the nation on Sunday, Rodríguez insisted Venezuela's sovereignty is secure and said she wants the country to become a global energy powerhouse.
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On Tuesday, the White House released a fact sheet about the arrangement.
Here's a look at what's known about the deal — and what remains unclear.
What are the terms?
The US government and a private operator in Venezuela have formed a new company that has been granted rights to access untapped oil fields for 100 years.
A statement from Rodríguez said the deal involves the development of 17 fields with a proven potential of 65 billion barrels.
It said the agreement could draw US$100 billion ($139 billion) in investment into Venezuela's oil industry and yield over US$209 billion ($291 billion) in taxes for the country.
The private operator is North America Blue Energy Partners, owned by Alejandro Betancourt, the White House confirmed on Tuesday.
The company currently produces about 200,000 barrels a day, which makes it the second-largest private operator in Venezuela behind Chevron, according to a source who spoke on condition of anonymity because they were not authorised to release the information.
Trump said the agreement was negotiated by US secretary of state Marco Rubio, defence secretary Pete Hegseth and Rodríguez.
The deal will give the US a 35 per cent ownership stake in the company, and the US state department will get a guarantee to buy 20 per cent of the output at cost. US purchases of oil will go towards US strategic oil reserves along with the military, according to a US official who was not authorised to discuss the matter publicly and spoke on the condition of anonymity.
The company would be the second largest corporate holder of proven reserves after Saudi Aramco, according to the US official.
Bob McNally, who was an energy adviser in former US president George W Bush's administration, said the current administration appears to be seeking ways to make it easier for the private sector to invest in Venezuela's industry through the deal.
"However, investors will remain cautious even if the terms of the deal, once released, pass legal muster. A future president could withdraw, and Caracas has twice thrown foreign investors out," McNally said.
Amos Hochstein, who was a senior energy adviser to former US president Joe Biden, said the deal is uncharted territory from a legal and diplomatic perspective.
It carries tremendous risk for companies thinking about doing business under the new arrangement, he said. Democrats could challenge the deal if they regain power in the US, as could future administrations in Venezuela.
"There will be a lot of challenges to what was just announced," Hochstein said. "I can only say, if it were me, I'd be nervous. And if I'm back in my old job in the next administration, then they should be nervous."
How have Venezuelans reacted?
Some in Venezuela have considered the deal a betrayal of what their government has stated repeatedly for decades: Venezuelan resources are for Venezuela, and leaders would not allow the US government access to those resources.
Harvard University professor Ricardo Hausmann, a former Venezuelan planning minister, called it a "shameful deal".
"Venezuelans will not respect this illegitimate deal and no major US oil company will take it seriously because they know it will not last,” Hausmann said on social media, adding that Rodríguez "has no legitimacy or constitutional power to commit Venezuela to any such deal".
In her national address, Rodríguez pushed back on some early criticism.
"One thing must be absolutely clear: Venezuela retains ownership and sovereignty over its resources," Rodríguez said.
She said the goal is to reach other agreements with transnational private companies such as Chevron, Repsol and Shell.
What's the reaction in the US?
It is unclear whether US congress will play a role in the arrangement, but politicians from both parties were quick to weigh in. Trump allies called it a win.
Republican senator Bernie Moreno said it was a historic deal that would help both countries.
"If it were up to DC Democrats, Maduro would still be in power, Venezuelan oil would be going to China at half price, and the people of Venezuela would be getting robbed by a corrupt regime," Moreno said in a post on social media.
It was widely condemned by Democrats who said Maduro's capture was a means to this end.
What questions remain?
Many important details remain unclear, including who will cover necessary investments and how America's stake in the company breaks down.
The US will get 55 per cent of the company's effective output, but it was not clear what portion of that comes from an ownership stake and how much comes from the right to buy oil at cost.
It is also unclear how the industry will react. Persuading big US oil companies to return to the region could prove challenging given the political uncertainty and damaged infrastructure.
David Oxley, chief climate and commodities economist at Capital Economics, said that on its face, the deal could double US oil reserves and reduce dependence on crude oil from Canada and Mexico.
But Oxley, writing in a commentary, cautioned that there are logistical hurdles and said the value of Venezuela's reserves may have been exaggerated under former Venezuelan president Hugo Chávez.
Even with legal and security guarantees, it is not clear that US oil companies "would be eager to invest", he wrote, noting that "there simply might be more enticing commercial opportunities on offer elsewhere".
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