US-Venezuela energy pact: What we know about Trump’s ‘biggest oil deal in world history’

US President Donald Trump has put Venezuela’s vast oil reserves at the centre of what he calls “the biggest oil deal in world history.” Venezuela’s interim President Delcy Rodriguez stated that the energy pact with the US will last 25 years and aims to revive the country’s struggling oil industry.Trump said the deal was negotiated by secretary of state Marco Rubio, defence secretary Pete Hegseth and Rodriguez. However, the White House has so far shared little information beyond Trump’s social media post announcing the agreement.For Rodriguez, the deal is about turning Venezuela’s oil wealth into real benefits for its people. Speaking on Saturday while visiting reconstruction work after twin earthquakes in late June left thousands of families homeless, she said the reserves would “cease to be an inert, cold statistic and will instead become concrete solutions. Housing is one of them.”“What we are doing is for the development of the country, but above all, to serve the Venezuelan people, to provide them with more jobs, better wages, and access to public services such as water, electricity, hospitals, schools and adequate food,” she said.What does the deal include?The US government and an unnamed private operator in Venezuela have set up a new company with rights to untapped oil fields for 100 years. Rodríguez said the agreement aims to increase Venezuela’s oil production to 1.5 million barrels per day. The deal covers 17 fields with a proven potential of 65 billion barrels, according to her statement.It could bring $100 billion in investment into Venezuela’s oil industry and generate more than $209 billion in taxes for Caracas.The US government also plans to take a 35% passive stake in North American Blue Energy Partners, owned by Venezuelan businessman Alejandro Betancourt, The Wall Street Journal reported on Saturday, citing people involved in the negotiations.How much oil will the US get?The US will get 55% of the new company’s effective output through an ownership stake and the right to buy oil at cost.A US official, who was not authorised to speak publicly and spoke on condition of anonymity, said oil bought by the US would go towards its strategic oil reserves and the military.The company would become the second-largest corporate holder of proven oil reserves after Saudi Aramco, the official said.However, it is not yet clear how much of the US’ 55% effective output will come from its ownership stake and how much will come through its right to buy oil at cost.Will the deal bring down US petrol prices?Trump has said the agreement will help lower gasoline prices in the US, though experts do not expect Venezuelan oil production to rise quickly.Venezuela’s oil infrastructure is in poor shape and will need years and billions of dollars in investment to repair. Neither side has said who will pay for the work or how much it will cost.The average US gasoline price stood at about $4.08 a gallon on Saturday, according to AAA, compared with $3.20 at the same time last year.Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, said the deal could be “helpful in the long run, but it’s not going to do anything to change the price of gasoline at the retail station for Labor Day weekend.”Kevin Book, managing director at ClearView Energy Partners, said Venezuela had room to increase its oil production. The country had previously produced more than 2.5 million barrels a day above its current levels, he said.But investment on this scale would take time.“It’s going to take time — many years — to deploy that much capital and produce the kind of incremental results that history suggests possible," Book said.Why is the deal facing criticism in Venezuela?The agreement has drawn criticism in Venezuela, with some people viewing it as a betrayal of the government’s long-standing position that the country’s resources belong to Venezuela and should not be opened up to the US.At a market in eastern Caracas on Saturday, Douglas Borjas said he was upset by the announcement.“I think they’re doing it to cling to power,” he said of Venezuela’s leaders. “It’s like, ‘I’m giving you a vast amount of petroleum as long as you leave me alone here in power.’”He added, “The Venezuelan people deserve better. Venezuela has resources that can be exploited, but for the benefit of the people, not for the benefit of the corrupt elite.”Harvard University professor Ricardo Hausmann, a former Venezuelan planning minister, called the agreement 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."Get the latest Business News and Live updates. Download the TOI app.