Trump administration secures stake in Venezuelan oil fields amid questions over Strategic Petroleum Reserve refill

The White House announced that a U.S. office will acquire up to a 35% equity interest in North American Blue Energy Partners, the second-largest private oil producer in Venezuela, giving the United States a 55% effective stake in the new venture. The partnership is intended to give America access to about 65 billion barrels of proven Venezuelan reserves and to help top out the Strategic Petroleum Reserve (SPR), which is at its lowest level since 1982.

Under the agreement, the State Department can purchase 20% of the oil produced at cost and has a right of first refusal on the remaining output. The venture plans to invest $100 billion in infrastructure to boost production, though the company is controlled by Alejandro Betancourt López, who is under investigation in Spain for alleged fraud and money-laundering, and whose Swiss probe was closed without charges.

Analysts note that Venezuelan heavy crude is not compatible with the SPR’s storage requirements. A 2016 Energy Department review concluded that the cost of adapting underground caverns for heavy oil would outweigh the benefits, and the current SPR mix of light sour and light sweet crude is deemed sufficient for emergency response. Matt Smith, director of commodity research at Kpler, said blending the heavy oil with lighter grades would still present operational challenges.

Production capacity is another concern. Venezuela’s output has risen to about 1.2 million barrels per day, far below the 3.5 million barrels per day it produced before the late-1990s socialist takeover, and the country’s aging infrastructure requires extensive repairs before higher levels can be achieved.

"This is not a near-term fix for the Iran-driven SPR depletion," said Helima Croft, head of global commodity strategy at RBC Capital Markets.

Trump acknowledged that the partnership would not lower gasoline prices before the upcoming midterm elections, noting that the timeline for significant oil deliveries could be two to three years. Congressional approval is required for SPR purchases, and the administration has not clarified how it would meet that requirement.

Industry observers suggest a possible workaround: selling Venezuelan crude to Gulf refiners and receiving light crude in exchange, which could then be used to refill the SPR without direct congressional action. Andy Lipow, president of Lipow Oil Associates, described such a swap as “barrels, not the actual oil.” Researchers at Clearview Energy Partners proposed selling the Venezuelan oil on the open market and using the proceeds to buy suitable light crude for the reserve. Both approaches would still take time and may not address the urgent need for SPR replenishment amid potential crises.