According to Fortune, the Trump administration is pushing forward a deal involving Venezuelan oil assets. According to the report, the U.S. federal government will hold 55% of the shares and production rights in a new joint venture, which corresponds to approximately 65 billion barrels of oil reserves. This means that the U.S. government will directly get involved in the ownership and production arrangements of upstream oil and gas assets.
The transaction involves a reserve of 65 billion barrels.
Reports cited U.S. officials as stating that Venezuela has granted a 100-year lease for a core oil field to a private enterprise, followed by the U.S. government acquiring a majority stake in the new company, with the remaining shares held by Venezuelan private operators. According to this account, the proven reserves held by the new company are second only to those of Saudi Aramco.
The Venezuelan government stated that this arrangement is expected to attract over $100 billion in investment and generate $209 billion in revenue for the country's finances. Public data shows that Venezuela has approximately 303 billion barrels of oil reserves, making it one of the countries with the highest reserves in the world.
- US proposed shareholding ratio: 55%
- Transactions involve reserves of approximately 65 billion barrels.
- Venezuela's current daily production: approximately 1.1 million barrels
The United States links it to energy security.
It was reported that after the United States and Israel launched a war against Iran, the global energy supply suffered a severe shock, with oil prices rising. Many countries utilized their crude oil reserves to buffer the supply gap. The U.S. Strategic Petroleum Reserves have now dropped to 289.7 million barrels, the lowest level since November 1982.
U.S. officials stated that as this Sino-U.S. joint venture gradually increases its production, some of the output in the future could be used to replenish the United States' strategic oil reserves. For the Trump administration, this deal is not only an overseas energy investment but also related to stockpiling and reducing the risk of supply from the Middle East.
However, the Venezuelan oil and gas industry has suffered from a long-term lack of investment, resulting in significantly outdated infrastructure. The country's current daily crude oil production is around 1.1 million barrels, which is a significant decline from the peak of over 3.5 million barrels more than 20 years ago. Even if additional funds are made available in the future, it will take many years to restore production to its historical highs.
International oil companies are still assessing the risks.
The report indicates that for Venezuela's production to significantly recover, it is still necessary for large international oil companies and oil service firms to invest capital, equipment, and operational capabilities. However, after years of asset nationalization, whether foreign investors are willing to return on a large scale remains a key practical issue for the success of these projects.
It is reported that Chevron is close to reaching an agreement to expand its operations in Venezuela, and Halliburton is also discussing providing equipment to the local area. The Italian energy company Eni has also stated that it is cooperating with Venezuelan authorities to assist in revitalizing the local energy sector.
Nevertheless, the legal structure, sources of funding, and implementation timeline of this new joint venture arrangement have not yet been fully disclosed. Reports citing opinions from individuals in the energy sector suggest that there is still considerable uncertainty regarding how much investment the project will ultimately attract and whether it will be able to proceed steadily over the long term.
