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The president donald trump presents the agreement for the United States to acquire a stake in 65 billion barrels of Venezuelan oil as a victory that will reduce gasoline prices and replenish depleted crude oil reserves. There is no certainty that the plan will achieve any of these goals during his presidency, if at all.
According to sources close to the matter, trump launched a large-scale operation after becoming increasingly frustrated by the slowness with which private oil companies, including ExxonMobil Holdings Corp. and ConocoPhillipsincreased production in Venezuela. By creating a new company controlled directly by the United States, his administration seeks to instill greater confidence in producers to commit to the development of the 17 oil fields included in the agreement.
But the White House has not explained where the $100 billion in investment planned for the deal will come from. Yes ok trump has made it clear that they will not come from taxpayers, the private operator that collaborates with the United States in the agreement, North American Blue Energy Partnersyou do not have sufficient financial capacity to invest that amount on your own.
All of those questions point to a deeper concern that the deal could suffer the same fate as some of the other major U.S. initiatives. trumpincluding the Gaza peace plan and a ceasefire with Iran, which never materialized.
“It depends on who signs, if they are really going to invest and, of course, what type of contracts we are talking about,” he said. Francisco Monaldidirector of Latin American energy policy at the Rice University in Houston. “Most of these are not properly proven reserves.”
The gap between the deal’s immediate political value and its likely effect on oil supplies is particularly important with the November midterm elections approaching, with the administration trump under pressure to reduce gasoline prices. The agreement provides trump an energy victory that can be claimed now, although increasing Venezuelan production will require years and substantial capital investment, he said. Rebecca Bill Chavezpresident and CEO of Inter-American Dialogue.
“The political discourse goes far beyond what Venezuela can offer in terms of short-term fuel production,” he said. Chavez.
The White House did not immediately respond to a request for comment. The vice president J.D. Vance declared on Monday that the increase in production in Venezuela It’s one of the reasons crude oil prices haven’t risen more recently.
“Obviously, the levels are higher than a few months ago,” he said. Vance to journalists in the Joint Base Andrews in Maryland. “But they are much more stable, in part because of what we see happening in Venezuela.”
Without a doubt, the United States is finding demand to develop other oil fields not included in its own project. He secretary of energy United States, Chris Wrightis scheduled to visit Caracas this week, where officials are expected to present more than a dozen oil and gas deals, including previously signed contracts and memorandums of understanding that could be finalized during the trip, according to sources close to the plans. These agreements will be independent of the direct participation of the United States that trump announced last week.
The visit of Wright aims to show that investment in the capital-strapped Venezuelan oil industry is rebounding after an expected wave of projects failed to materialize following the dictator’s capture. Nicolas Maduro in January. This push is motivated more by domestic U.S. politics than developments in Venezuela, as members of the Trump administration come under increasing pressure to demonstrate results, according to a person familiar with the matter who asked not to be identified discussing confidential conversations.
Supply disruptions through the Strait of Hormuz have caused fuel prices to spike in the United States just ahead of the November midterm elections. According to sources, the flurry of deals sought by the Trump administration are aimed, in part, at demonstrating progress in Venezuela and achieving a political and economic victory as the war in Iran drags on.
Chevron Corp.the only major US oil company operating in Venezuela, is negotiating the incorporation of two heavy crude oil fields to its current operations in the country, while the oil and gas producer GeoPark Ltd.based in Bogotá, plans to take over the Bare field in the Orinoco Oil Belt, according to sources familiar with the negotiations.
Hunt Oil Co.a private producer based in Dallas, has already signed an agreement to develop the Caro and Carisito fields. In a speech televised by Venezuelan state television, the interim president Delcy Rodriguez also mentioned Chevron, Repsol, Eni SpA, Shell Plc and BP Plc as companies expected to participate in additional oil and gas deals.
Rodriguez wants to increase production to more than 1.5 million barrels of oil a day, which represents an increase of about 30% from current levels. Still, it would be less than half of the nearly 3.5 million barrels a day the country produced in the late 1990s, before Chávez nationalized the industry. And the challenges are enormous.
Many of the 17 fields that the United States is promoting for development lack infrastructure and an unreliable electricity supply. Repairing them could cost billions of dollars, and the work would extend beyond the mandate of trumpwhich ends in January 2029.
The political and legal uncertainties are also discouraging. It is not clear whether whoever succeeds trump In the White House he will maintain his strategy in Venezuela. And in Caracas, there is no guarantee that the leader who succeeds Rodriguez continue to be as cooperative with the United States.
Therefore, the oil companiesespecially the large ones, are acting cautiously.
“We observe limited interest among large US energy companies in investing capital in Venezuela at the pace and scale proposed by the US administration,” they stated. Vincent Piazza and Justin Teresi. “Pending claims and deep investor unease will continue to constrain U.S. carriers’ near-term capital commitments.”
Still, a visible pipeline of projects could help convince markets that more Venezuelan crude will eventually be available, supporting the government’s effort to reassure markets about future supply.
