US energy secretary says investment could more than double Venezuela's oil output within years

A vessel carrying Venezuelan crude oil is docked at the port of Freeport, Texas. [Reuters]
A vessel carrying Venezuelan crude oil is docked at the port of Freeport, Texas. [Reuters]

Venezuela's National Assembly has approved a sweeping oil agreement granting the United States access to roughly one-fifth of the country's proven petroleum reserves. The deal features an unusual structure in which the US Defense Department takes a direct equity stake in a Venezuelan private oil company and secures the right to purchase a portion of its output at cost. The arrangement also covers oil fields where China and Russia have long held sway, raising the prospect of intensified competition among the three powers over energy resources.

The ruling-party-controlled National Assembly voted Tuesday (local time) to ratify the oil agreement reached between the government of Delcy Rodriguez and the Donald Trump administration, according to Reuters and other international media.

At the heart of the deal is a long-term US right of access to approximately 65 billion barrels of crude — roughly one-fifth of Venezuela's proven oil reserves.

Under the agreement, Venezuelan private oil company North American Blue Energy Partners (NABEP) secures 100-year development rights over 17 oil fields.

Those fields hold proven reserves of about 65 billion barrels, exceeding the approximately 46 billion barrels of proven crude reserves within US territory. The White House described the contract as "the largest oil deal in the world."

The US government will also take a direct stake in NABEP.

The Defense Department's Office of Strategic Capital will acquire a 35 percent equity stake in NABEP's parent company without committing large sums of additional public funding. The Department of State, meanwhile, secured the right to purchase 20 percent of all crude produced from every oil field NABEP currently operates or will operate in the future, at production cost.

It marks the first time the Office of Strategic Capital — established in 2022 — has taken a direct equity stake in a foreign private company, the EFE news agency reported.

The inclusion of oil fields previously under the influence of Chinese and Russian companies is expected to draw pushback from both countries. A US official told Reuters that bilateral ties with China "are very solid" and that Beijing "would not have been surprised" by the move.

US Energy Secretary Chris Wright, speaking shortly after arriving in the Venezuelan capital Caracas on Wednesday, said the deal would more than double Venezuela's oil output within a few years, Reuters reported.

Venezuela's oil production peaked at an average of about 3 million barrels per day in the late 1990s before plunging due to underinvestment, mismanagement and US sanctions, falling to between 1.1 million and 1.2 million barrels per day in recent months.

Wright said the surge in production driven by the deal's investment would put downward pressure on oil prices, but cautioned that "the biggest obstacle to curbing the current rise in gasoline and diesel prices is refining capacity" — even if crude prices fall.

During his visit, Wright will finalize the bilateral oil agreement and sign accords with private-sector entities.

Major US oil company Chevron, along with Italy's Eni, India's ONGC, Colombia's Geopark and US firm GE Vernova, are also set to sign contracts related to Venezuelan energy projects this week.


mokiya@heraldcorp.com