The Donald Trump administration is nearing a deal to secure 17 Venezuelan oil fields for a long period. The plan is for U.S. corporations to develop the fields and supply the crude produced to the United States on a stable basis. The goal is to lower gasoline prices and refill the Strategic Petroleum Reserve (SPR), which has been sharply reduced, but some note it could run afoul of Venezuela's constitution.
On the 27th, Reuters, citing multiple sources, reported that the U.S. and Venezuelan governments are discussing an agreement that would guarantee long-term U.S. access to part of the country's crude reserves. One source said, "It is indeed underway and is being discussed at the highest levels of the U.S. and Venezuelan governments." The deal could be signed and made public soon.
According to Reuters, one option under review would have the U.S. government secure several Venezuelan oil fields and then allocate development rights to U.S. oil companies through auctions or bids. Crude produced from the developed fields would be supplied to the United States.
Seventeen Venezuelan oil fields are included in the talks. Undeveloped fields in the Orinoco Belt, a global deposit of extra-heavy and heavy crude, and aging fields in Lake Maracaibo also made the list. Some fields are operated by small Chinese corporations that signed contracts during the Nicolás Maduro administration.
The United States and Venezuela are said to be considering a plan to lease the fields for a long term. However, current Venezuelan law has no explicit provision allowing the leasing of oil blocks. The Venezuelan constitution also requires the state to handle the core activities of the oil industry.
The recently amended Venezuelan hydrocarbons law allows field operations through joint ventures and production sharing contracts. But for decades, the Venezuelan government has restricted foreign oil companies from recording the country's crude reserves as an asset on their books. That is why some warn the agreement, even if signed, could get entangled in constitutional challenges and legal disputes.
U.S. online outlet Axios also reported that U.S. Energy Minister Chris Wright is expected to visit Caracas as early as next week for the talks. The U.S. Department of Energy, Venezuela's Ministry of Petroleum, and state oil company PDVSA did not respond to requests for comment.
Since January, after capturing and ousting former Venezuelan President Nicolás Maduro, the Trump administration has been pushing a plan to supply Venezuelan crude stably to U.S. refiners. It is also exploring ways to expand investment by U.S. corporations in Venezuela's energy industry, which is struggling with production due to aging facilities.
Venezuela, which holds the world's largest crude reserves, is currently producing about 1.25 million barrels of oil a day. The United States expects that expanding field development will secure relatively inexpensive crude on a stable basis and bring down gasoline prices.
The Trump administration is under political pressure from rising gasoline prices ahead of the midterm elections scheduled for later this year. It also faces the task of refilling the Strategic Petroleum Reserve, which was released in succession after Russia's 2022 invasion of Ukraine and the Iran war in February this year.
The U.S. Strategic Petroleum Reserve currently stands at about 290 million barrels, or 41% of total storage capacity. The U.S. government is also considering an exchange of crude with domestic oil companies, but it is struggling to increase reserves due to budget shortfalls and maintenance work at storage facilities.