Venezuela’s leftist government has long sought to portray the country’s democratic opposition as treacherous mercenaries beholden to American capital. That was especially true during Venezuela’s 2024 presidential election. In February of that year, Delcy Rodríguez, then Nicolás Maduro’s vice president, accused opposition leader María Corina Machado of not doing anything without first taking a phone call from her masters in Washington and claimed that, if given the chance, Machado would hand over Venezuela’s natural resources to the Americans.
After American forces captured Maduro in January, Rodríguez assumed presidential powers and quickly acquiesced to the new American-led status quo in Venezuela. Rodríguez’s deference to Washington is so profound that she reportedly told Fox News anchor Bret Baier that President Donald Trump would have to approve an interview before she agreed to appear on his show.
Furthering her case to be included under the dictionary entry for projection, Rodríguez has now struck a major oil deal with the American government. Venezuela has granted private oil producer North American Blue Energy Partners (NABEP) 100-year concessions to operate 17 fields that the White House says contain more than 65 billion barrels of proven oil reserves. In return, NABEP granted Washington a 35 percent stake in its parent company, a guaranteed right to buy 20 percent of production at cost, first refusal on the remaining 80 percent, and veto power over every board appointment.
The bargain could secure heavy crude for American refineries, reduce Chinese and Russian influence in Venezuela, and attract the capital needed to repair the Venezuelan oil industry that was largely destroyed by the governments of Hugo Chávez and then Maduro. Yet it also binds the United States to century-long rights issued by an unelected government and gives Washington a financial interest in keeping Rodríguez in power—a blow to advocates for democracy in the South American nation. Assessing the agreement begins with understanding how Venezuela built up and tore down its oil sector.
How Chávez broke Venezuela’s oil machine.
The decline of the Venezuelan oil industry began under Chávez. In 1976, before he came into power, the oil sector had been nationalized, leading to the creation of a new state oil company known as Petróleos de Venezuela, or PDVSA. Venezuela reopened the oil sector during the 1990s, and private investment helped production reach 3.4 million barrels a day in 1998.
Chávez became president the following year, promising even greater national control over the oil industry. Chávez was especially opposed to PDVSA’s commercial autonomy and placed political appointees on the PDVSA board, whose members had traditionally risen through the company’s merit system.
On April 7, 2002, he escalated his dispute by firing seven oil executives during one of his weekly television broadcasts. Four days later, an opposition march and military rebellion briefly drove him from power. After a longer oil strike later that year, his government dismissed roughly 18,000 PDVSA employees, including much of its managerial, engineering, and geological corps.
The purge changed the purpose of the company dramatically. Although Venezuela received the equivalent of more than $1 trillion in oil revenue during Chávez’s tenure, PDVSA operated less like a company and more like a patronage machine and a de facto development ministry. It financed social programs, highly subsidized gasoline, political figures, and ventures far removed from producing oil, while external debt more than quadrupled to about $150 billion.
As a result, suppliers went unpaid while wells, pipelines, refineries, and power systems were neglected. Equipment disappeared, records decayed, and experienced workers emigrated. As the industry weakened, Chávez and Maduro mortgaged more of the country’s surviving output to governments willing to keep them afloat. Chinese state creditors made roughly $106 billion in loan commitments, much of it repaid with oil; the Russian government and Rosneft supplied at least $17 billion in loans and credit lines and accumulated stakes in six projects. Venezuela sent Cuba subsidized oil in exchange for doctors and other personnel.
These relationships prolonged Chavista rule and gave Beijing and Moscow claims on future production, but they never restored the discipline, equipment, or skilled workforce the industry had lost. This summer, the country was producing about 1.2 million barrels a day, barely a third of the output Chávez had inherited.
Why U.S. oil companies left.
While it would be easy to imagine that this episode in U.S.-Venezuela relations has been driven by the unified interests of the U.S. government and the major oil companies, the gap between how the Trump administration sees Venezuela and how most of the oil majors see it provides a more compelling explanation.
In 2007, Chávez announced that PDVSA would be taking over projects run by foreign oil companies, forcing them to choose between negotiating with PDVSA as minority stakeholders in their own projects or being expropriated entirely. Among the oil majors operating in Venezuela, Chevron accepted the terms and kept an operating foothold while ExxonMobil and ConocoPhillips refused, lost their assets, and began claims battles that continue into the present day. Conoco has sought roughly $12 billion in restitution, while Exxon says it is still owed $984.5 million for its losses.
As a result, many of the oil majors—but especially two of the three with prior experience in Venezuela—have been reluctant to pursue the reconstruction of Venezuela’s oil industry that the administration desires.
Rodríguez’s revenue model seems to assume oil will be $65 a barrel, but one estimate holds that some new projects in Venezuela will need prices above $80 a barrel to break even. The investment thus holds little appeal for the oil majors, which can instead direct capital toward lower-cost production in Guyana, the Permian Basin, and elsewhere.
While the history of American involvement in Latin America has plenty of examples of the U.S. government intervening on behalf of private industry, in this particular case it has been the government pushing private industry to enter before a federally sponsored alternative exists.
A three-layer agreement.
The easiest way to understand the new agreement is as three bargains stacked on top of one another. First, Rodríguez’s government has granted NABEP 100-year rights over 17 fields; Reuters reports that 14 are new awards and three are projects the company already operates with PDVSA. Venezuela still owns the oil beneath the ground, but NABEP receives the contractual opportunity to produce and commercialize it through field arrangements whose precise form has not been disclosed.
Second, NABEP has given Washington four different forms of leverage over the company. The White House says the Pentagon’s Office of Strategic Capital (OSC) will receive a 35 percent share of NABEP’s corporate parent. The State Department receives the right to buy 20 percent of the oil from every current and future NABEP field at “production cost” and may match any outside offer for the remaining 80 percent. The federal government may veto every proposed director, and Americans must form a majority of NABEP’s board. The ownership stake gives the Pentagon a claim on company value and dividends; the State Department’s purchase right concerns the crude itself; the matching right gives Washington priority over other buyers; and the board provisions provide influence that a 35 percent minority shareholder would not ordinarily possess.
The third bargain involves the money required to turn contractual rights over reserves into oil. The White House says NABEP plans to raise and invest up to $100 billion, while the company’s first detailed corporate release says the program is “expected to involve nearly” that amount. Neither statement identifies investors who have committed capital or provided a financing schedule.
In plain English, Caracas supplies the field rights; NABEP runs the business; Washington receives a minority ownership stake, veto power over the board, and first access to the oil; and investors who have not yet been identified are expected to supply most of the financing.
NABEP claims that roughly $1 billion of its company-funded investment raised production in other ventures from about 18,000 to more than 200,000 barrels a day in two years; Reuters estimates that current output is closer to 170,000. Reaching NABEP’s goal of more than 1 million barrels a day would require a five- to nearly ninefold expansion while Venezuela simultaneously rebuilds its drilling capacity, electricity, pipelines, and ports.
For the U.S., choosing NABEP as a partner makes commercial sense, but its controller, Alejandro Betancourt, injects additional risk into an already fraught agreement. His company, Derwick Associates, won roughly $2 billion in Chávez-era power contracts, which gave him a reputation inside Venezuela as one of the bolichicos, the politically connected businessmen who prospered via opaque state deals. Betancourt is also entangled in a European investigation over money laundering and has been investigated for embezzling funds from PDVSA, though he adamantly denies any wrongdoing and has never been charged with any crimes.
Is the agreement legal?
The White House says U.S. law governs its agreement with NABEP, a point that leaves Rodríguez’s authority over the Venezuelan fields in question. Hydrocarbon reform laws passed earlier this year by Venezuela’s National Assembly allow locally domiciled private companies to operate under contracts with PDVSA or another state company while Venezuela retains ownership of the oil underground. Yet the White House describes NABEP’s rights as “100-year concessions.”
José Ignacio Hernández, a Venezuelan constitutional lawyer and a former special attorney general of Venezuela, argues that Venezuelan law allows only a PDVSA-linked contract limited to 25 years. He also warns that selling oil at production cost may violate fiscal protections and that concentrating 17 fields in NABEP could create a parallel oil administration inconsistent with the Venezuelan Constitution.
Some global law firms read the hydrocarbon reform as creating a private contractor model distinct from state-majority joint ventures, and describe the express 25-year term and 15-year extension as applying to the latter. Under neither analysis, however, would Venezuelan law permit a 100-year contract.
American law presents a separate problem. The White House says the OSC received 35 percent of NABEP’s parent and the State Department obtained a right to buy 20 percent of production at cost. The statute authorizing OSC permits it to make loans and guarantees and provide technical assistance; it contains no express authority for direct equity investments, and the Pentagon initially said the office does not take equity stakes in companies. Rather than purchasing shares outright, the Pentagon would reportedly receive penny warrants allowing it to acquire up to 35 percent of the parent company for a nominal price. OSC has previously received warrants alongside authorized loans, but no public document identifies an underlying loan or guarantee in this transaction or another statutory basis for accepting, holding, and exercising the warrants.
A separate Pentagon statute allows the Department of Defense to accept contributed property and could provide another route, but thus far the administration has not identified its legal justification, and the State Department’s authority to accept the negotiated purchase right is likewise unexplained.
The downstream effects.
The administration has argued that the deal will redirect Venezuelan oil away from our adversaries, lower gas prices for Americans, and contribute to the Strategic Petroleum Reserve. Some of these arguments have merit, while others seem unlikely.
The deal will change which countries operate parts of Venezuela’s oil industry. U.S. officials told Reuters that five of NABEP’s 14 new contracts had been operated by Chinese companies while a Russian firm had operated another. Replacing them gives Washington influence over investment, services, production, and sales, although displaced companies may still assert claims against the fields or their revenue.
The strategic claim is not entirely one-sided, however. Making the Venezuelan oil sector profitable again also means that Venezuela will be in a better position to repay its debts to the Chinese government. A future restructuring should therefore repay legitimate Chinese principal while denying Beijing a claim over particular barrels, fields, or operating decisions.
The argument that the deal will lower gas prices for Americans might be true over the longer term. Current Venezuelan exports have already been redirected toward the United States, while substantial new production will require years of investment in wells, pipelines, and ports. If the projects eventually add enough supply, they would place some downward pressure on global oil prices and, at the margin, American gasoline prices, but U.S. consumers should not expect this news to be accompanied by swift relief at the gas pump.
Venezuelan oil could also replenish the Strategic Petroleum Reserve, though probably not through direct storage. Venezuela’s crude is heavier than the reserve’s usual grades, but the Energy Department could exchange it with Gulf Coast refiners for a smaller, equal-value quantity of compatible oil, as it did with Mexican heavy crude in 1998 and 1999, though no acquisition or exchange has yet been announced.
What happens next?
The most likely outcome of the deal now touted by the Trump administration is a smaller version of what’s being advertised. NABEP and other authorized operators are likely to repair selected producing fields, U.S.-bound exports will continue, and output may rise gradually. The 100-year rights, $100 billion investment figure, and target above 1.5 million barrels a day will remain largely prospective until financing, field contracts, and federal authorities are clarified.
A more ambitious expansion could become possible if the first projects perform well. Audited production gains, clearer contracts, and reliable payment channels could draw in service companies, lenders, and established producers such as Chevron. Even then, the effect on global oil prices would emerge over years rather than months.
A negotiated rewrite is also possible. Congress, creditors, Venezuelan courts, or a future elected government could challenge the federal stake, the century-long term, or the manner in which the fields were awarded. That would not necessarily end American participation, since any government that succeeds Rodríguez’s would still need investment and markets in some form. In other words, the agreement’s commercial opening is likely to survive even if its most extraordinary provisions do not.
Of course, given the unreliable nature of the Venezuelan regime, it is also possible that Rodríguez reneges on the deal entirely once doing so becomes convenient. The deal’s most ironic element may be that given how long it will take to actually generate meaningful results, in the best-case scenario neither its American nor its Venezuelan architects will be in power to see it bear fruit.