US President Donald Trump’s plan to secure direct access to Venezuela’s oil reserves could undermine the country’s efforts to revive its struggling energy sector. While Washington says the arrangement will accelerate reconstruction and strengthen US energy security, critics warn that preferential treatment for a US backed company could discourage competition and foreign investment.
US Seeks Major Stake in Venezuelan Oil
Under the proposal, Washington would acquire a 35% stake in North American Blue Energy Partners, controlled by Venezuelan businessman Alejandro Betancourt.
The company would receive a 100 year lease covering 17 Venezuelan oilfields with an estimated 65 billion barrels of reserves. In return, the United States would receive a guaranteed share of production and first refusal on the remaining output.
NABEP currently produces around 170,000 barrels per day and aims to increase production to more than 1 million barrels per day.
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Washington’s Energy Strategy
The Trump administration describes the arrangement as part of a broader plan to stabilize and rebuild Venezuela following the removal of former President Nicolas Maduro.
Washington argues that greater control over Venezuelan crude would strengthen Western Hemisphere energy supply chains, replenish US strategic petroleum reserves and potentially reduce fuel costs.
Concerns Over Market Competition
The proposal has raised concerns that Venezuela could develop a two tier oil market.
NABEP and the US government would receive preferential commercial terms, while companies such as Chevron and other international producers would operate under ordinary market conditions.
This could discourage investors who fear that political connections rather than commercial competitiveness could determine access to Venezuela’s oil resources.
Foreign Investment at Risk
Venezuela needs substantial foreign investment to rebuild its petroleum industry. Chevron and other international energy companies are preparing new projects under a revised framework designed to attract foreign capital.
However, the proposed US arrangement could introduce uncertainty over future investment conditions.
Energy companies committing billions of dollars to projects lasting decades are particularly sensitive to political and regulatory instability.
Venezuela’s Oil Industry in Decline
Venezuela possesses some of the world’s largest oil reserves, but years of underinvestment, mismanagement, corruption and US sanctions have severely damaged its petroleum industry.
Production has fallen from around 3.5 million barrels per day in the 1990s to roughly 1 million barrels per day today.
Existing production could initially recover to around 1.5 million barrels per day as investment increases and neglected fields are restored.
Infrastructure Remains a Major Challenge
Reviving production will require much more than reopening oilfields.
Venezuela needs major investment in pipelines, refineries, storage facilities, export terminals and electricity infrastructure. Much of the country’s existing energy infrastructure has deteriorated after years of neglect.
Rebuilding the sector could require tens of billions of dollars and sustained participation from international energy companies.
Long Term Production Potential
Despite the industry’s decline, Venezuela retains enormous production potential.
Consultancy Rystad Energy expects Venezuelan production to reach around 2.3 million barrels per day by 2035 and potentially exceed 3 million barrels per day by 2050, with much of the growth coming from the Orinoco Belt.
Realizing that potential, however, depends on stable rules and sufficient investment.
Political and Legal Risks
The proposal also faces political and legal challenges. Venezuela has a history of nationalizing foreign oil assets, while the United States has traditionally avoided directly controlling another country’s petroleum resources.
The arrangement could therefore create uncertainty over ownership, market access and the legal authority of Washington to manage Venezuelan crude.
Analysis
Trump’s Venezuela oil strategy highlights a fundamental tension between US energy security and Venezuela’s need for an open investment environment.
Giving one company privileged access to Venezuela’s reserves could provide Washington with greater control over a strategically important energy source. But the same preferential arrangement could discourage other international companies from investing, leaving Venezuela dependent on a narrower group of producers.
That would be counterproductive because Venezuela’s oil revival requires enormous capital, technology and expertise that a single company is unlikely to provide on its own.
The broader issue is therefore not whether Venezuela can increase production, but whether it can create a stable and competitive energy market capable of attracting long term investment. If investors begin to view access to Venezuelan oil as dependent on political relationships with Washington or Caracas, the country’s recovery could become slower and more expensive.
Ultimately, the success of the plan will depend on whether it expands Venezuela’s overall production capacity or concentrates control over its resources. A strategy intended to restore Venezuela’s oil industry could undermine that recovery if preferential US access comes at the expense of competition, legal certainty and broader foreign investment.
With information from Reuters.
