Josh Weiner
The United States, a nation that has historically relied on private enterprises like Exxon Mobil and Chevron for its oil production, has taken an unprecedented step into the realm of state-backed energy control. While countries such as Saudi Arabia boast national champions like Aramco, and Russia has Rosneft, the U.S. has typically abstained from direct federal ownership in the oil sector. This long-standing approach appears to be shifting, at least where foreign assets are concerned, with a new arrangement in Venezuela that grants the U.S. federal government a significant stake in a joint venture poised to control substantial oil reserves.
This new deal, orchestrated by the Trump administration, involves a 100-year lease for prime Venezuelan oil fields, as confirmed by a U.S. official. Under the terms, the federal government will command 55% of the company’s effective output through a combination of equity ownership and direct oil production. The remaining share will be held by a private Venezuelan operator. This strategic move is projected to establish the new company as the world’s second-largest corporate holder of proven oil reserves, placing it directly behind Saudi Aramco. Delcy Rodriguez, Venezuela’s interim president, has publicly stated that this agreement is expected to draw in over $100 billion in investment and generate a substantial $209 billion for the Venezuelan government.
Venezuela possesses the largest oil reserves globally, estimated at a staggering 303 billion barrels. The Trump administration’s acquisition of control over 65 billion barrels from this vast resource significantly surpasses the U.S.’s own proven domestic reserves, which stand at 46 billion barrels. This foray into direct oil asset management is not an isolated incident for the administration, which has previously invested in domestic companies such as chipmaker Intel, rare earths miner MP Materials, and mineral explorer Trilogy Metals. Furthermore, it holds revenue-sharing agreements with AI chip industry leaders Nvidia and AMD for their sales to China, indicating a broader strategy of federal involvement in critical industries.
The timing of this energy deal is particularly notable, emerging approximately nine months after President Trump ordered military action to apprehend Venezuelan dictator Nicolás Maduro on federal narcoterrorism and drug trafficking charges. Adding another layer of geopolitical complexity, a month following that operation, a conflict involving the U.S. and Israel against Iran led to an unprecedented energy supply shock, driving oil prices upward and compelling nations to deplete their strategic crude stockpiles. In the U.S., the Strategic Petroleum Reserve has dwindled to 289.7 million barrels, marking its lowest level since November 1982. Industry experts have voiced concerns that the SPR is fast approaching its operational minimums, which would eliminate any further buffer against potential oil deficits stemming from the Middle East.
The U.S. official involved in the Venezuelan negotiations indicated that as the newly formed U.S.-Venezuelan company scales up its oil production, the output will play a crucial role in replenishing the Strategic Petroleum Reserve. However, Venezuela’s oil sector has been in a state of disrepair for decades, with current production at 1.1 million barrels per day, a sharp decline from its peak of 3.5 million barrels over two decades ago. Restoring the country’s output to previous levels would necessitate billions of dollars in investment and many years to materialize. Global oil giants, equipped with the necessary financial resources, would need assurance that Venezuela is a safe environment for business, especially after past government nationalizations of assets.
Despite the challenges, some major players are already signaling their intent to re-engage. Chevron is reportedly nearing an agreement to expand its long-standing operations within Venezuela, according to sources familiar with the discussions. Similarly, oilfield-services titan Halliburton is said to be in talks to bring equipment into the country. Executives from several other oil and gas companies are also reportedly preparing to sign production deals in the coming week. Italy’s Eni, which maintains a presence in Venezuela, recently affirmed its collaboration with Venezuelan authorities to aid in the revitalization of the energy sector. Yet, many specifics surrounding the Trump administration’s new Venezuelan venture remain undisclosed, and energy analysts express skepticism regarding the potential scale of investment it can attract. Dean Baker, a senior economist at the Center for Economic and Policy Research, voiced a commonly held concern on X, suggesting that any future democratic government in Venezuela would likely repudiate the deal.
