Fortune.com
Summary
Many top oil-producing countries have state-run national champions, but the U.S. relies on private companies like Exxon and Chevron. The Trump administration secured a stake in a Venezuelan oil venture, giving the federal government 55% ownership of a company with 65 billion barrels of reserves. The deal, involving a 100-year lease, aims to boost U.S. energy security and restock the Strategic Petroleum Reserve. Venezuela’s oil sector has declined significantly, and experts remain skeptical about the deal’s success.
Our Reading
The numbers tell one story.
The U.S. now has a state-owned oil stake in Venezuela.
The deal gives the government 55% of a company with 65 billion barrels.
Venezuela’s oil sector is in disrepair and needs billions in investment.
The deal’s success depends on rebuilding trust and infrastructure.
Author: Evan Null
Top Oil Countries and Their National Champions
Many of the world’s top oil countries have state-run national champions, such as Saudi Arabia’s Aramco, Russia’s Rosneft, the UAE’s Abu Dhabi National Oil Company, Brazil’s Petrobras, and Mexico’s Pemex. These companies play a central role in their countries’ energy strategies and economic planning.
The U.S., despite being the world’s largest oil producer, does not have a state-run oil company. Instead, the task of pumping crude is left to private-sector giants like Exxon Mobil and Chevron, as well as numerous smaller operators in regions like the Permian Basin. This structure reflects the U.S. preference for market-driven energy production.
The Trump administration’s deal for 65 billion barrels of Venezuelan oil reserves gives the federal government a stake in a new joint venture. This move marks a shift from the traditional U.S. model, where private companies dominate the energy sector.
The U.S. official said the company will be the world’s second-largest corporate holder of proven reserves after Saudi Aramco. This highlights the strategic importance of the deal for both the U.S. and Venezuela.
Venezuela has the largest oil reserves in the world, with an estimated 303 billion barrels. The Trump administration’s stake in 65 billion barrels of that amount exceeds the U.S. proven reserve total of 46 billion, underscoring the scale of the deal.
The U.S. and Its Growing Role in Foreign Energy
The Trump administration’s majority stake in an oil company follows its investments in chipmaker Intel, rare earths miner MP Materials, mineral explorer Trilogy Metals, and dozens of other firms. This trend reflects a broader push to increase U.S. control over critical industries.
The administration also has revenue-sharing agreements with AI chip leaders Nvidia and AMD for sales to China. These deals highlight the administration’s focus on securing strategic assets and maintaining economic leverage.
The latest deal comes nearly nine months after Trump ordered the military to capture Venezuelan dictator Nicolás Maduro and bring him to the U.S. to face federal narcoterrorism and drug trafficking charges. This move was part of a broader strategy to exert pressure on the Venezuelan government.
A month after that operation, the U.S. and Israel launched a war against Iran, causing a major energy supply shock. This event led to soaring oil prices and forced countries to draw down crude stockpiles, highlighting the volatility of global energy markets.
The U.S. official told reporters that as the U.S.-Venezuelan company ramps up oil production, its output will help restock the Strategic Petroleum Reserve. However, Venezuela’s oil sector has been in disrepair for decades, and production is now only 1.1 million barrels a day, down from a peak of 3.5 million barrels more than 20 years ago.
Challenges and Skepticism Surrounding the Deal
Boosting Venezuela’s output to those levels again would require billions of dollars in investment and years before they reach fruition. This underscores the long-term nature of the project and the challenges ahead.
Meanwhile, global oil giants with the financial resources to make such investments must be convinced that it’s safe to do business in Venezuela again after their assets were nationalized by earlier governments. This skepticism is a major hurdle for the success of the deal.
Some are preparing to make the leap. Chevron is close to a deal to expand its longstanding operations in Venezuela, and oilfield-services giant Halliburton is also in talks to bring equipment to the country. Executives from several oil-and-gas companies will sign production deals next week, according to reports.
Italy’s Eni, which has a presence in Venezuela, announced it’s working with authorities there to help revitalize the energy sector. This signals some level of confidence in the country’s potential, despite its troubled history.
Still, many details about Trump’s new Venezuela venture are still unknown, and energy experts were skeptical about how much investment it could bring. The long-term success of the deal remains uncertain.
Reactions and Concerns
Dean Baker, senior economist at the Center for Economic and Policy Research, posted on X that if Venezuela ever gets anything resembling a democratic government, the very first thing it will do is flush Trump’s deal down the toilet. This highlights the political risks associated with the deal.
The U.S. official said the company will be the world’s second-largest corporate holder of proven reserves after Saudi Aramco. This suggests that the deal has significant strategic and economic implications for both the U.S. and Venezuela.
Venezuela’s oil sector has been in disrepair for decades, and production is now only 1.1 million barrels a day, down from a peak of 3.5 million barrels more than 20 years ago. This decline illustrates the challenges of reviving the sector.
The U.S. Strategic Petroleum Reserve has fallen to 289.7 million barrels, its lowest level since November 1982. Some industry experts have warned that the SPR will soon reach operational minimums, wiping out any further cushion to offset the oil deficit from the Middle East.
The U.S. official told reporters that as the U.S.-Venezuelan company ramps up oil production, its output will help restock the SPR. However, the success of this plan depends on the ability to increase production and stabilize the sector.
Conclusion and Future Outlook
The U.S. now has a state-owned oil stake in Venezuela, a move that reflects a broader strategy to increase U.S. control over critical industries. This deal is part of a trend that includes investments in chipmakers, rare earths miners, and other key sectors.
The Trump administration’s deal for 65 billion barrels of Venezuelan oil reserves gives the federal government a stake in a new joint venture. This move marks a shift from the traditional U.S. model, where private companies dominate the energy sector.
Venezuela has the largest oil reserves in the world, with an estimated 303 billion barrels. The Trump administration’s stake in 65 billion barrels of that amount exceeds the U.S. proven reserve total of 46 billion, underscoring the scale of the deal.
Despite the potential benefits, many details about the deal are still unknown, and energy experts remain skeptical about how much investment it could bring. The long-term success of the deal remains uncertain.
The U.S. official said the company will be the world’s second-largest corporate holder of proven reserves after Saudi Aramco. This highlights the strategic importance of the deal for both the U.S. and Venezuela.
