Understanding The US-Venezuela Oil Deal – Analysis
By Wilder Alejandro Sanchez
Key Takeaways:
- The author describes two post-Maduro oil moves: a White House–NABEP partnership (Pentagon 35% stake, State right to buy 20% of output at cost, 100 years, 17 Orinoco fields) and Chevron’s expanded Orinoco joint ventures (~$7 billion over five years). Analysts cited say first oil from the new venture could take 10–15 years; cheaper U.S. pump prices are not immediate.
- Interim President Delcy Rodríguez has welcomed the deals and U.S. military anti-trafficking access. The piece says little open Chavista or opposition protest, which sources attribute to authoritarian control, self-interest, or keeping Washington’s favor. U.S. Democrats call the arrangement a grab for oil after Maduro’s removal.
- China and Russia may hold stakes or debt in some of the same fields (~$15 billion Venezuelan debt to Beijing is cited). Legal fights or a long wait-and-see strategy are possible. U.S. telecom opening that excludes Huawei/ZTE is another loss for Beijing. The author’s view: headlines outrun what is settled.
US-Venezuela relations have continued to evolve since the removal of then-President Nicolás Maduro in early January through Operation Absolute Resolve. Recently, President Donald Trump announced a historic deal to exploit Venezuela’s oil reserves. That deal and its ramifications require more discussion, given its potential repercussions for the United States, Venezuela (including the future of interim President Delcy Rodríguez), and even other relevant actors like China.
The Deal(s)
Between late August and early September, two oil-related announcements were made concerning Venezuela. The first announcement came from the White House: the US is partnering with a Venezuelan company called North American Blue Energy Partners (NABEP) to exploit Venezuela’s oil reserves. Details of the contract are sketchy: a new company will be created via the partnership, and “the Pentagon would take a 35% ownership stake, and the State Department would have the right to buy 20% of the oil produced at cost,” as PBS reported. The deal will last 100 years and includes 17 fields (with reserves expected to total around 65 billion barrels), mostly in Venezuela’s Orinoco Belt (Franja del Orinoco). President Donald Trump has said this project will dramatically lower gas costs for US consumers.
The NABEP announcement can be interpreted as an attempt by the White House to encourage other oil companies to invest in Venezuela. The US administration appears frustrated that, even after Maduro’s removal, US oil companies are reluctant to invest in Venezuela because of an unpredictable political environment and other challenges related to jump-starting the country’s oil industry again.
The second deal was announced in early September, when Energy Secretary Chris Wright visited Caracas. Specifically, the senior official announced that Chevron, the only US company operating in Venezuela so far, will expand oil operations in the Orinoco Belt. A company statement on September 2 added that “Chevron and its Venezuelan partners signed agreements that update joint-venture terms and expand development rights in the Orinoco Belt—including the Carabobo-1 and Carabobo-2-South-A blocks.” The joint ventures plan to invest more than US$7 billion over the next five years, the company added.
The Broader Implications
Analysts generally agree it could take 10-15 years for this new US-NABEP venture to start producing oil. Venezuelan crude oil is heavier than US oil, so it costs US refineries more to refine (though technological advances could make the process less costly). Moreover, the NABEP deal itself could be legally challenged—by Democrats in the US, by political parties in Venezuela, by environmental groups or local communities affected by the surveying and drilling, and even by Russian and Chinese companies (discussed below).
Trump’s announcement that the NABEP venture will essentially immediately lower costs in the US is likely an attempt to regain popularity after the war in Iran and the recent shocks and scandals in US oil prices and food security. The US midterms will take place in November, so the announcement is likely a tactic to reassure and convince some voters to vote for the Republicans.
The Democrats have criticized the deal by arguing that Operation Absolute Resolve was carried out to benefit Trump and his billionaire supporters. “This is proof Trump put our service members at risk to get Venezuelan oil for his billionaire buddies,” Senator Chris Van Hollen said. Moreover, Senator Tim Kaine, who serves on the Senate Foreign Relations Committee, accused the president of using Maduro’s ouster to “control Venezuelan oil.” We will see in two months if promises of cheaper oil swayed US voters.
The Reaction (or Lack Thereof) from Caracas
The deal will strengthen relations between interim President Delcy Rodríguez and Washington. Rodríguez is fulfilling Maduro’s (illegal) presidential term, which lasts until 2030, and she seems in no hurry to leave.
The Venezuelan opposition and many sectors, including some in the US, are calling for elections in Venezuela. Meanwhile, the White House and State Department argue that a “democratic transition” is still the ultimate goal—Secretary Marco Rubio recently said that the NABEP contract is part of this transition—however, it is debatable whether the US government is now in any rush to remove Rodríguez from power, given that she has accepted US requests, particularly opening up the country to US companies and allowing US military operations in Venezuelan territory to eliminate drug traffickers. Rodríguez has praised the oil deal; in a social media statement, she explained that the deal “will have a significant impact on our nation’s revival,” adding, “it will facilitate the flow of investment aimed at the recovery and reconstruction of strategic infrastructure.”
How will loyalists to Maduro and the late Hugo Chávez react to increasing US-Venezuela relations? Per the NABEP deal, the US could control as much as 20% of Venezuela’s crude oil reserves. This situation is a dramatic change from even a year ago, when the Venezuelan “Chavista” government claimed total independence from Washington. Since coming to power, Rodríguez has replaced several ministers and military commanders who were openly loyal to Maduro with individuals who are more “open-minded.” For example, the new Venezuelan Minister of Defense, Gustavo González López, has said the armed forces support the contract with NABEP, as it will benefit the Venezuelan economy.
This author asked two analysts for their opinions on the apparent lack of resistance or protests against these announcements.
Dr. Evan Ellis, Senior Non-Resident Fellow at the Center for Strategic and International Studies (CSIS), theorized that “despite the alliance with the Trump administration, Venezuela continues to be an authoritarian state run by criminals,” therefore “the Chavista-controlled National Assembly and military are not going to be openly critical, even though everything about the deal flouts the principles of the avowed revolution of Hugo Chávez.” In other words, Ellis believes personal interests trump (pun not intended) former ideological considerations by the one-time Maduro and Chávez loyalists.
A slightly different opinion is shared by Henry Ziemer, a Fellow with the Americas Program at CSIS, who theorizes that “Delcy Rodríguez and her loyalists have effectively consolidated power.” However, it is also plausible that “dissenters are seeking to feign support while plots advance behind the scenes.” Ziemer explains that it is too early to predict any resistance accurately.
Some media reports have interviewed Venezuelan citizens who believe the deal allows Rodríguez to stay in power; however, no mass protests have been reported against the NABEP and/or Chevron deals. Most Venezuelans may have other worries, like the terrible status of the Venezuelan economy, the June earthquakes that hit the Venezuelan coast, and overall frustration against the former Maduro government. To be fair, Ziemer also highlighted that “a lack of public protest is likely also a product of the continued authoritarian conditions within Venezuela.” In this scenario, with a lack of popular support and a military that proclaims loyalty to Rodríguez, pro-Maduro politicians or military officers (however many are left) are unlikely to speak out.
Interestingly, anti-Maduro opposition groups negotiating with Washington and Caracas on other issues—specifically political transition—are similarly silent about the NABEP deal. I will theorize that this is not a topic of interest since these political groups want to retain Washington’s support.
Where Is China?
Two other actors matter. Russia has been silent since Maduro’s removal: Moscow has likely accepted the loss of Venezuela as a strategic ally in the Western hemisphere, as Moscow has other concerns and priorities, like the war in Ukraine, tensions with the US, or consequences of the war in Iran.
Another actor to monitor is China, as Chinese energy companies had vast access to Venezuela during the Hugo Chávez and Maduro presidencies. Another issue is that the US government recently lifted sanctions so Venezuela can upgrade some of its communication equipment, including 5G technologies. However, the new deal allows US communications companies to operate in Venezuela, not Chinese ones. This is a big loss for companies like Huawei and ZTE, which have invested years and money in Venezuela’s telecommunications system.
Beijing’s strategy is based on adaptation: finding a way to work with any government to access resources the Chinese government and economy need. On the other hand, Beijing has enjoyed preferential access to Venezuela for years, and adapting to a more Washington-friendly government in Caracas will be a challenge. Venezuela owes China significant debt, and it is debatable how this situation will be addressed moving forward. Both Ellis and Ziemer provided some issues to consider.
Both agree that one (of the many) problems with the NABEP deal is that it overlaps with Chinese and Russian interests. Dr. Ellis explained that “Chinese and Russian firms may have some interests in the 17 oil fields,” adding that “it is not clear by what vehicle those oil fields will be taken away from the current contract holders or owners and transferred to the new ones.” However, a (legal) pushback can be expected on this front. Ziemer similarly noted that “several of the 17 oil fields included in the deal are reportedly under operation by Chinese or Russian companies in partnership with PDVSA,” adding that “Beijing’s ownership of some $15 billion in Venezuelan sovereign debt does give it decent leverage at the negotiating table.”
In other words, Beijing or Moscow could potentially launch legal challenges to upset Trump and the White House and delay the project. Alternatively, Beijing could let Chevron and the NABEP project modernize Venezuela’s decaying oil infrastructure and then reap the benefits. Beijing does like to play the long game after all, while the Trump administration thinks in terms of months (the midterms) or a couple of years (the change of administration in January 2029).
As for lifting sanctions on Venezuela’s telecommunications industry while also icing out Chinese companies, Ellis is pessimistic about the future of this industry and sector, as the Venezuelan people deserve access to better telecommunication services; “who [the contracts] ultimately go to, and how long that takes with the corrupt Chavista bureaucracy is not clear.” The beneficiaries among US companies will depend on their “relationship with the White House,” he argues. As for Beijing, there will be complaints, “but in the short term, there is probably not much they can do about it” except for using this development to “present themselves as alternatives to the United States that don’t engage in bullying, ironically.”
As for Ziemer, while the announcement will indeed help Venezuela further distance itself from dependence on China, “other international telecommunications suppliers are unlikely to court Venezuela without major subsidies” either from Caracas, Washington, or potentially the International Monetary Fund or World Bank. In other words, as with the oil industry, companies want assurances and assistance to ensure that investing in Venezuela is profitable and safe. Ziemer believes that, given Venezuela’s many other problems and challenges, “the money needed for any effort to rip-and-replace Huawei or ZTE infrastructure is probably lower on the list of priorities.”
While the NABEP project and the expansion of Chevron’s operations made headlines, many unknowns (including legal pushback or other tactics from China and Russia) remain unresolved before the project can move forward. What is certain is that these projects will not immediately decrease oil prices in the United States. Still, they signal the evolving situation in Venezuela and how the country is entering a new, post-Maduro/Chávez era, at least for now.
- This article was published by Geopolitical Monitor.com
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