On Friday evening, United States officials confirmed information leaked to the press about the US assuming an ownership stake in Venezuelan oil. US President Donald Trump, on his personal social media website, Truth Social, wrote that the US has “secured majority US control over 65 BILLION BARRELS of proven Oil Reserves [sic] in Venezuela at no cost to the American taxpayer.”
US Secretary of State Marco Rubio said the deal “demonstrates how President Trump’s bold foreign policy is driving America First wins: securing stable reserves and low-cost oil in our Hemisphere and lowering gas prices here at home.”
Specific details of the deal were not immediately released, but interim Venezuelan President Delcy Rodriguez expressed support for the “historic” agreement with the Trump administration, which she said will develop 17 oil fields containing 65 billion barrels. She claimed private companies would invest more than $100 billion and generate over $209 billion in taxes for Venezuela.
Assuming those figures are true, that would amount to Venezuela receiving $3/barrel for the largest known petroleum reserves in the world — or about 4.7% of its value on the current international market.
Venezuela’s Socialist Party, PSUV, in a statement released via Telegram, wrote “The United Socialist Party of Venezuela, true to its historic commitment to national sovereignty and the well-being of the people, expresses its full support for comrade Delcy Rodríguez, acting president of the Republic, regarding the agreements signed with the U.S. government.”
It’s a dramatic reversal for a party that for decades claimed foreign capital in Venezuelan energy markets represented neo-colonialism and theft.
Stories broken in the immediate aftermath of the announcements revealed that many US energy companies were nearing final deals to provide investment in Venezuelan infrastructure in return for oil exploitation rights.
Many companies had previously been tepid about long-term investment in the country. Most analysts assume the US government has offered at least partial investment guarantees to the private sector, in a deal which will be managed by the Pentagon, according to statements made to Axios by administration officials.
Colombia’s richest family, the Gilinksis, who own election machinery and a large chunk of Colombian media, will also reportedly be in on the deal.
Reactions among Venezuelans were varied, with some claiming the deal amounted to “the largest robbery in Venezuelan history.” Others criticized the fact that the deal is highly likely to leave Rodriguez, who was installed by the US after capturing then-president Nicolas Maduro in January, in power for the foreseeable future.
Others, however, particularly supporters of Trump, praised the deal, claiming it will “finally rebuild the infrastructure destroyed by Chavismo,” using the name of the socialist political movement created by former Venezuelan President Hugo Chavez.
Tony Mawad, a journalist in Caracas who often covers social and business issues, wrote: “The Venezuelan government’s communiqué suggests a return to the pre-1976 model [in Venezuela], granting fields to U.S. companies under fixed-term concessions, with operators paying royalties and taxes to the state.”
There is a lot left to learn about a final deal, the details of which have not yet been made public. But one aspect is undeniable: neither Trump nor Rubio mentioned anything about Venezuelan elections in the immediate future. It’s clear that Rodriguez is Washington’s woman in Caracas for the medium term.
In July here at PWS we talked about the rise of “MAGA-Chavismo” in Venezuela, backed by both Caracas and Washington D.C. It would seem, from the point of view of Rubio, Trump, and Rodriguez at least, that unlikely business arrangement is finally bearing fruit.
The US was never interested in “democracy” in Venezuela; it was interested in power projection and filling the US Treasury.
The US is already the largest oil producer in the world, and they presumably now control almost a third of Venezuelan reserves as well — the largest oil reserves on the planet. The ramifications for global energy markets, and continued US dependence on fossil fuels, are profound.
Perhaps more importantly for Venezuelans, however, many of whom hoped the January invasion of Caracas by the US might herald reform, it’s clear that the US plans on maintaining a client state ostensibly run by the Chavistas.
Trump has often demonstrated that he is not driven by ideology but rather dominance and submission. Rodriguez wrote Friday evening that “I extend my deepest gratitude to the President of the United States of America, Donald Trump, as well as to US Secretary of State Marco, and the US government, for their support in developing this agreement, which represents a historic milestone in bilateral relations between Venezuela and the US.”
Now she is speaking Trump’s language.
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And yet, the Venezuelan oil reserves are not the type that are refined into gasoline and diesel, but the thick crude that is more suitable for asphalt, etc. This is why oil companies have been so hesitant to invest in heavy and ultra heavy Venezuelan oil. It is expensive to extract and takes more effort to refine it into gasoline. Much of it is in the form of tar sands deeply buried. The Trump administration has been misleading the American people about the potential results of controlling Venezuelan oil, promising that it would lower American gas prices, but even the most uninformed people know that oil prices are set on the global market and it would only lower prices in the US if it lowers prices globally.
In some ways, it makes sense, though, because American refineries are set up for heavy crude. Currently, the oil that is extracted in the US is mostly light crude, which is actually the good stuff for gasoline. So, rather than retrofitting our refineries to process light crude, we are exporting the light crude, the good stuff, and importing the heavy crude, which is more toxic and contributes more to climate change than light crude. It is dirty stuff that is full of heavy metals and other toxins. Objectively, it's a stupid move as a species to develop these oil reserves rather than put the effort and expense into renewables, which are on the rise. We see the Trump administration engaging in climate denialism to the point where it is actually reducing our renewable capabilities while the rest of the world surges forward. It is quite disappointing that we have fallen for this, as the global increase in temperature blows past tipping points. Even my 14 year old son recognizes that it's coming much sooner than anticipated and it is stealing his future. Is the additional money for billionaires really worth it?