5 minBusiness
Trump administration to control majority stake in Venezuelan oil venture
The Trump administration has secured a majority stake in a new joint venture controlling 65 billion barrels of Venezuelan oil reserves, a deal that would make the U.S. federal government the operator of the world's second-largest corporate holder of proven reserves.
The Trump administration has reached a deal that will give the U.S. federal government control of a new joint venture holding 65 billion barrels of Venezuelan oil reserves, according to a U.S. official. The agreement, announced Friday, marks a significant departure for the United States, which has historically relied on private companies rather than a state-owned oil champion to produce its crude.
Under the terms of the arrangement, the federal government will control 55% of the company's effective output through equity ownership and oil production, while a private Venezuelan operator will hold the remaining share. The country's interim president, Delcy Rodriguez, has granted a private company a 100-year lease for prime oil fields, the U.S. official said. The official added that the new entity will become the world's second-largest corporate holder of proven reserves, trailing only Saudi Arabia's Aramco.
Rodriguez said the deal will attract more than $100 billion in investment and generate $209 billion for Venezuela's government. Venezuela holds the world's largest oil reserves, estimated at 303 billion barrels. The 65 billion barrels covered by the agreement exceed the U.S. proven reserve total of 46 billion barrels.
The deal follows a series of federal investments under the Trump administration, including stakes in chipmaker Intel, rare earths miner MP Materials, and mineral explorer Trilogy Metals, as well as revenue-sharing agreements with AI chip leaders Nvidia and AMD for sales to China.
The agreement comes nearly nine months after Trump ordered the military to capture Venezuelan dictator Nicolás Maduro and bring him to the U.S. to face federal narcoterrorism and drug trafficking charges. A month after that operation, the U.S. and Israel launched a war against Iran that produced the worst energy supply shock in history, spiking prices and forcing countries to draw down crude stockpiles.
The U.S. Strategic Petroleum Reserve has fallen to 289.7 million barrels, its lowest level since November 1982. Industry experts have warned the reserve could soon reach operational minimums, eliminating any cushion to offset the oil deficit from the Middle East. The U.S. official said that as the new U.S.-Venezuelan company ramps up production, its output will help restock the reserve.
Venezuela's oil sector has been in decline for decades, with production now at 1.1 million barrels per day, down from a peak of 3.5 million barrels more than 20 years ago. Restoring output to those levels would require billions of dollars in investment and years of work. Global oil giants with the financial resources to make such investments must also be convinced it is safe to do business in Venezuela again after their assets were nationalized by earlier governments.
Some companies are preparing to return. Chevron is close to a deal to expand its longstanding operations in Venezuela, according to sources cited by the Wall Street Journal. Oilfield-services giant Halliburton is in talks to bring equipment to the country, and executives from several oil-and-gas companies are expected to sign production deals next week. Italy's Eni, which has a presence in Venezuela, announced Saturday that it is working with authorities there to help revitalize the energy sector.
Oil trader Phil Flynn called the deal a "generational win" that could lower gas prices for American families, arguing that U.S. technology could transform Venezuela's oil industry. "The United States has the technology and the people to develop those oil fields unlike anything Venezuela has been ever able to do in history," he said.
Many details about the venture remain unknown, and energy experts have expressed skepticism about its potential. "For sure, and if Venezuela ever gets anything resembling a democratic government, the very first thing it will do is flush Trump's deal down the toilet," Dean Baker, senior economist at the Center for Economic and Policy Research, posted on X.
