U.S. President Donald Trump said on the 30th (local time) that he would refill the U.S. Strategic Petroleum Reserve, which has been depleted with Venezuelan crude. The plan is to secure reserve stocks through large-scale oil field development recently agreed to with Venezuela, but the prevailing view is that it will be difficult to realize in the short term.
On this day, President Trump said on the Truth Social social media platform (SNS), "One of the things I will do with Venezuelan oil is fill up the Strategic Petroleum Reserve, which has been effectively depleted by 'Sleepy Joe Biden,'" adding, "The work to fill the reserve to the brim will begin soon, and this is a gift from Venezuela to the American people."
As of the 21st of this month, the U.S. Strategic Petroleum Reserve stood at about 290 million barrels, the lowest level since the end of 1982. The storage capacity of the reserve is 714 million barrels, but the current holdings do not reach even half that. After the Biden administration released 180 million barrels in 2022, the largest amount in the reserve's history, President Trump also released a large volume of the reserve on Feb. 28 to curb rising oil prices following the outbreak of the U.S.-Iran war.
The United States aims to refill the reserve through large-scale oil field development in Venezuela. Earlier, on the 28th, President Trump revealed, "The United States has just reached an agreement with Venezuela on the 'largest oil transaction in world history.'" North American Blue Energy Partners (NABEP), owned by local businessman Alejandro Betancourt, who is close to Interim President Delcy Rodríguez of Venezuela, will hold development rights for 17 undeveloped Venezuelan oil fields for 100 years, and the United States will secure 55% of the output.
The potential reserves of the target oil fields are estimated at 65 billion barrels. The United States, along with its NABEP equity, will also have the right to buy produced crude at cost. Although details of the agreement were not disclosed, the Wall Street Journal (WSJ), citing a person familiar with the talks, reported that the United States would hold a 35% non‑managing equity stake in NABEP and have the right to purchase 20% of the output at cost on a priority basis.
The problem is that it takes considerable time to produce new crude in Venezuela. The New York Times (NYT) said on this day, "It could take years for the new oil field development project to produce oil at a meaningful scale," adding, "That is especially the case in Venezuela, where the energy infrastructure is outdated and broken."
The Associated Press also quoted experts as saying, "It will take years and billions of dollars to rehabilitate Venezuela's dilapidated oil infrastructure," adding, "It is expected to be difficult for production to increase to a significant level in the short term." Reuters noted that it is unclear how quickly the reserve can be refilled under this agreement and what benefits U.S. consumers might see in the near term.
Venezuela holds the world's largest crude reserves, but corruption, mismanagement, and U.S. economic sanctions have steadily reduced crude output from 3.5 million barrels per day in 1999. According to the Associated Press, Venezuela's share of global crude supply is just 1% today. Moreover, it is known that to quadruple crude output, currently estimated at around 1 million barrels per day, would require an investment of $100 billion.
Kevin Book, managing director at energy consulting firm ClearView Energy Partners, said that large-scale investment is unlikely to occur in the short term, adding, "It will take years to deploy that much capital and, as history shows, to achieve incremental results."
For the United States to refill the Strategic Petroleum Reserve with Venezuelan crude, congressional approval is also required. According to the Council on Foreign Relations (CFR), crude purchases to replenish the reserve are handled by the Secretary of Energy, but any new expenditure needed must be approved by Congress. President Trump ordered the reserve filled to its maximum capacity to support U.S. oil producers struggling early in the COVID‑19 pandemic, but Congress at the time did not approve the crude purchases.
Amos Hochstein, who served as an energy adviser to former President Biden, said the agreement is unprecedented from legal and diplomatic perspectives, and he expressed concern that Democrats could retake power in Washington or Venezuela's next government could challenge the deal. "There will be many difficulties with what has been announced," he said.