US-Venezuela Oil Pact Links 65bn Barrels to $100bn Investment Push

A sweeping US-Venezuela oil pact links American access to projects containing more than 65 billion barrels of proven reserves with a push to attract about $100 billion of private investment, offering Washington a long-term Western Hemisphere energy hedge while giving Caracas a potential route to rebuild its weakened oil industry.

The bilateral framework covers 17 strategic oilfields and targets production of more than 1.5 million barrels per day, according to interim President Delcy Rodríguez, who says the agreement will run for 25 years. US officials have separately said the private venture involved has been granted 100-year development rights over the fields. Full contracts have not been published, leaving the relationship between the two periods unclear.

The scale is considerable. Venezuela holds roughly 303 billion barrels of proven reserves — the world’s largest national total — but produces only about 1.25 million bpd after years of underinvestment, mismanagement and sanctions. The 65 billion barrels covered by the agreement represent more than one-fifth of that reserve base.

President Donald Trump has described the arrangement as giving the US majority control over the reserves. More precisely, however, Venezuela retains sovereign ownership of its hydrocarbons while US interests are expected to gain substantial economic rights through the new operating structure, including equity and access to crude production.

US Gains a Western Hemisphere Energy Hedge

For Washington, the strategic prize is preferential access to a vast oil resource close to US refineries, rather than ownership of the oil underground.

A US official says the arrangement gives Washington 55% of the venture’s effective output through a combination of ownership and rights to purchase crude at cost. Some of that oil could be directed toward rebuilding the US Strategic Petroleum Reserve and supplying military requirements.

Additional Venezuelan production could also provide Gulf Coast refiners with more heavy crude and strengthen Western Hemisphere supply at a time when the Iran war has exposed the vulnerability of Middle Eastern energy routes.

The benefits, however, are unlikely to arrive quickly. Reserves are not production. Venezuela’s ageing fields, power network and export infrastructure require substantial rehabilitation, while much of its heavy and extra-heavy crude is more expensive and technically demanding to develop and process than conventional oil.

Chevron, already operating in Venezuela, is among the companies expected to finalise talks under the country’s new energy framework. Its existing infrastructure and operating experience could make it an important bridge between political agreements and additional barrels.

Trump’s claim that the agreement will lower US gasoline prices should therefore be treated as a longer-term ambition. Pump prices depend on global crude markets, refinery margins and domestic supply conditions, while materially increasing Venezuelan production could take years.

Venezuela Trades Access for Capital

For Caracas, the economic bargain is greater foreign participation in exchange for capital, technology, operational expertise and access to international markets.

Rodríguez says the programme could eventually generate about $209 billion in revenue for the Venezuelan state, based on an assumed oil price of $65 a barrel. She says roughly $19 from each barrel produced and sold under the arrangement would flow to Venezuela.

Higher output could increase dollar earnings, government revenues and import capacity while creating jobs and rehabilitating the country’s most important export industry.

The trade-off is greater long-term foreign involvement in a sector historically regarded as a strategic national asset. That raises questions over contract durability, political opposition and whether future Venezuelan governments would maintain the arrangements.

The decisive question is whether political access to the reserves can attract enough private capital to develop them.

The proposed $100 billion should currently be treated as an investment target, not committed capital expenditure. A complete roster of investors and lenders, project-level commitments and the final mix of equity, debt and government-backed financing has not been disclosed.

For oil companies, the headline reserve figure alone will not determine investment. Returns will depend on development costs, royalties and taxes, sanctions policy, contract enforcement, infrastructure reliability and the ability to repatriate profits.

The strategic exchange is nevertheless clear: Washington is seeking privileged access to one of the world’s largest concentrations of oil, while Caracas is offering greater foreign participation to secure the capital and technology needed to restore production. Whether the pact becomes an energy-market game changer will depend less on the headline 65 billion barrels than on how much of the proposed $100 billion is actually committed — and how quickly investment can turn reserves into commercially viable production.