EnergyNow Editorial Staff

Summary

• The agreement gives the United States extraordinary economic and strategic rights over 17 Venezuelan oilfields containing an estimated 65 billion barrels of recoverable oil.
• Venezuela could receive badly needed investment, employment, technology and government revenue, but the projected benefits depend on attracting as much as US$100 billion from investors who remain deeply concerned about political and legal risk.
• The deal was negotiated without a competitive bidding process by an unelected interim government, and the complete contracts have not been released.
• As currently presented, the agreement appears considerably more advantageous to the United States than to Venezuela. Its lack of democratic legitimacy also creates a serious risk that a future elected Venezuelan government will challenge, renegotiate or cancel it.

How the Agreement Works

The arrangement announced by President Donald Trump is not simply a conventional oil-production contract between Venezuela and an American oil company.

Venezuela’s interim government has granted North American Blue Energy Partners, or NABEP, rights to develop 17 oilfields containing approximately 65 billion barrels of recoverable reserves. Most are in the Orinoco Belt, with others around Lake Maracaibo.

The concessions were reportedly awarded without a competitive bidding process.

The principal terms disclosed by Washington are:

The United States did not immediately purchase ordinary shares. Instead, its 35% position was structured through “penny warrants.” These give Washington the right to acquire the equity later for a token amount while receiving the economic benefits of an equity holder in the meantime.

Crucially, the warrants contain protection against dilution. If NABEP issues new shares to raise the enormous amount of capital it needs, the U.S. position can be maintained at 35%. Washington is also entitled to dividends before exercising the warrants. Reuters explains the warrant structure here.

The wording matters. The United States has not literally acquired ownership of the oil still underground. Under Article 12 of Venezuela’s constitution, subsurface hydrocarbons belong to the Venezuelan Republic and are considered inalienable public property. What Washington has obtained is economic participation, governance power and preferential purchasing access through a private company holding development concessions.

There is also an important unresolved contradiction: the White House describes 100-year concessions, while interim President Delcy Rodríguez has characterized the arrangement as a 25-year project. Because the complete contracts have not been released, it is impossible to reconcile those descriptions. EnergyNow’s examination of the agreement highlights this discrepancy.

Advantages for the United States

The deal is exceptionally favourable to Washington in several respects.

First, the U.S. obtains access to 20% of production at cost. That could produce a substantial discount from the world price once the fields are operating profitably. The oil could potentially supply Gulf Coast refineries, military requirements or, following blending or exchange arrangements, the Strategic Petroleum Reserve.

Second, Washington receives preferential access to the remaining 80%. This does not necessarily mean it obtains that oil below market value, but it gives the U.S. first position during a supply emergency.

Third, the United States receives 35% of NABEP’s economic upside without making an immediate conventional equity investment. Its anti-dilution warrants preserve that position as other investors contribute capital.

Fourth, Venezuela produces the kind of heavy crude many U.S. Gulf Coast refineries were designed to process. Increased Venezuelan supply could partially replace barrels from more distant or less politically aligned suppliers.

Fifth, the agreement redirects Venezuelan oil away from China and Russia. China purchased roughly 80% of Venezuelan exports in 2025, although those volumes represented only about 4% of total Chinese imports. Washington’s purchase rights could also complicate China’s efforts to recover billions of dollars in Venezuelan oil-backed loans. EnergyNow’s analysis examines the consequences for China.

Finally, the arrangement could generate American refinery, drilling, engineering and oilfield-service activity. The White House says American equipment and infrastructure will be used extensively.

These benefits, however, are predominantly long-term. Venezuela currently produces only about 1.1–1.2 million barrels per day. Many of the selected fields need electricity, pipelines, processing plants, diluent and export-terminal improvements. This oil will not rapidly transform American gasoline prices.

Potential Advantages for Venezuela

Venezuela desperately needs foreign capital and technical expertise. Its production exceeded three million barrels per day in the late 1990s but subsequently collapsed because of underinvestment, corruption, mismanagement, sanctions, skilled-worker losses and deteriorating infrastructure.

The government says the arrangement could attract more than US$100 billion in investment and eventually generate approximately US$209 billion in royalties and taxes. Rodríguez has suggested the fields could ultimately produce more than 1.5 million barrels per day.

If those ambitions were realized, Venezuela could benefit from:

• Rehabilitated fields, pipelines, power systems and export facilities.
• Thousands of direct and indirect jobs.
• Increased royalties, taxes and export earnings.
• Renewed access to American equipment, capital and oilfield technology.
• Greater production capacity and a partial restoration of Venezuela’s position in world oil markets.
• Reduced dependence on discounted sales to China and politically connected intermediaries.
• A U.S. strategic interest in protecting Venezuelan production and commercial stability.

The fundamental idea—using foreign investment to rebuild Venezuela’s petroleum industry—is economically sound. Even Machado has said the United States should be Venezuela’s principal strategic partner.

But that does not establish that this particular agreement offers Venezuela fair value.

Disadvantages for Venezuela

The most obvious disadvantage is the deeply asymmetric allocation of benefits.

Twenty per cent of production can be sold to the United States at production cost. Depending on how “production cost” is calculated, Venezuela and the project could surrender most or all of the commercial margin on those barrels. Washington then has preferred access to the rest.

The U.S. also receives a 35% economic interest, dividends, extensive governance rights and anti-dilution protection. Venezuela, meanwhile, is contributing the resource and carrying much of the political, sovereignty and environmental exposure.

Interim government projections suggest Venezuela would retain approximately US$19 per barrel through taxes and royalties. Some analysts have questioned whether that return is below what Venezuelan law would normally require.

Other disadvantages include:

• No competitive auction to establish whether Venezuela could obtain better terms.
• The effective creation of a captive or highly restricted market for NABEP’s oil.
• Preferential treatment for one company that could disadvantage Chevron, Eni and other experienced operators.
• The risk that a 100-year concession locks several generations into terms negotiated during an extraordinary political transition.
• U.S. control over board appointments and U.S. legal jurisdiction for major parts of the corporate arrangement.
• Possible damage to Chinese creditor claims and future relations with China.
• The concentration of an enormous national resource position in NABEP, a company controlled by businessman Alejandro Betancourt.

The choice of Betancourt adds reputational risk. Reuters reports that he has been investigated in multiple jurisdictions over alleged money laundering involving funds taken from PDVSA, although he has never been charged, denies wrongdoing and his lawyers say the allegations have been extensively examined. A Swiss proceeding reportedly remains open. Reuters details Betancourt’s background and relationship with Washington.

The Machado Objection and the Danger of a Democratic Transition

María Corina Machado is not arguing that Venezuela should reject American investment. Her objection concerns democratic authority, transparency and national consent.

She has described the United States as the principal partner Venezuela needs to develop its potential. But she also declared:

“The wealth of our subsoil does not belong to an illegitimate regime – it belongs to the Venezuelan people.”

Machado says Venezuelans feel “sadness and anger” because an unelected government made a generational decision about the country’s most important national asset without consulting them. Her position is reported here.

That objection presents a material commercial risk, not merely a political complaint.

A future democratically elected government could:

• Demand publication and parliamentary review of the contracts.
• Challenge whether the interim government possessed the constitutional authority to grant the concessions.
• Investigate the absence of competitive bidding.
• Renegotiate taxes, royalties, purchasing rights and concession lengths.
• Challenge the 20%-at-cost provision as an improper transfer of public wealth.
• Refuse to recognize U.S. governance rights or the 100-year term.
• In the most extreme case, cancel or expropriate the concessions.

Whether such actions would succeed depends on contractual provisions that remain undisclosed, including stabilization clauses, termination rights and international arbitration protections.

The political paradox is considerable: Washington says the deal supports Venezuela’s eventual democratic transition, but it has simultaneously given the current unelected government a valuable economic lifeline. If U.S. access depends on Rodríguez remaining in power, Washington may have less incentive to demand prompt elections.

Investors will recognize that contradiction. The more the agreement appears imposed on Venezuela without public consent, the less secure its 100-year promises become. The Atlantic Council concludes that the current framework is poorly designed to provide Venezuelans with the benefits and security they deserve.

Is This a Good Deal for Venezuela?

The country unquestionably needs U.S. investment, sanctions relief, technology and market access. Venezuela cannot restore its oil industry using PDVSA’s resources alone. A substantial partnership with the United States could be transformational.

But an economically necessary partnership is not automatically a fair agreement.

The lack of competitive bidding, the 20%-at-cost commitment, U.S. governance control, unanswered questions about NABEP, conflicting descriptions of the agreement’s duration and the absence of democratic approval all weigh against Venezuela.

The central failure may be that the deal tries to manufacture investment certainty through American control instead of creating certainty through Venezuelan legitimacy, transparent laws and functioning democratic institutions. Reuters Breakingviews analysis on EnergyNow similarly concludes that the political, legal and commercial weaknesses could prevent the promised capital from arriving.

A better agreement would subject the fields to transparent bidding, disclose the complete contracts, protect competitive market pricing, establish independently verified royalty and tax terms, obtain approval from a legitimately elected Venezuelan legislature and guarantee that petroleum revenues benefit the Venezuelan population.

Without those protections, the agreement may deliver strategic oil rights to Washington but not the durable reconstruction Venezuela needs.

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