Trump administration announces joint venture for Venezuela oil reserves
The United States will take a 55% stake in a joint venture to develop Venezuela's oil fields, but experts say the arrangement is unusual and unlikely to affect gasoline prices soon.
The Trump administration said on Friday that it has reached an agreement with the Venezuelan government to develop a large portion of the country's oil reserves through a joint venture in which the United States would receive 55% of the output, roughly 65 billion barrels underground. An unnamed U.S. official described the partnership as involving a private Venezuelan company, though details on operational responsibilities remain unclear.
Experts highlighted several challenges. "The idea that the U.S. government becomes a shareholder of this joint venture is extremely unusual," said Francisco Monaldi, director of the Latin America Energy Program at Rice University. Gerald Kepes, president of Competitive Energy Strategies, noted that the United States lacks a national oil company and questioned who would manage the fields on the ground.
Potential investors may be hesitant. "It's not clear who will rush in for that opportunity," said Paasha Mahdavi, an associate professor of political science at UC Santa Barbara. She added that the deal’s "at-cost" pricing structure is unattractive in an industry where firms typically seek to capture premiums between production costs and market prices.
The arrangement is also being made with the interim government led by Delcy Rodríguez, who assumed office after former President Nicolás Maduro was detained. Kepes said the legitimacy of that government could raise further concerns for oil companies.
President Trump claimed the deal would lower gas prices for American taxpayers, but analysts argue any impact on gasoline costs is unlikely in the near term. "A significant increase in production is highly unlikely," Monaldi said, noting that many of the fields are still undeveloped and would take years before delivering measurable output.
"The idea that the U.S. government becomes a shareholder of this joint venture is extremely unusual," – Francisco Monaldi "At the end of the day, they're still signing a deal with the Delcy Rodríguez government," – Gerald Kepes "'At cost' is not attractive in this industry," – Paasha Mahdavi