Trump admin likely to sign deal with Venezuela to access its oil fields: How will it work? What are the legal obstacles? | Today’s news
US President Donald Trump’s administration is reportedly working on a deal that would give Washington long-term access to some of Venezuela’s oil reserves, potentially lowering the cost of oil imports.
Here’s what we know about the proposed deal
Citing sources familiar with the development, Reuters reported on Thursday (local time) that the deal, likely to be signed and made public soon, could allow the Trump administration to secure a group of Venezuelan oil fields for development by US companies. This move would ensure a guaranteed supply of oil for the United States.
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One of the people familiar with the development said: “It is real and it is being discussed at the highest levels of the US and Venezuelan governments.”
How will the deal work? What are the challenges?
Another source told Reuters that both sides were considering a “lease” as a legal model to make the deal work. The deal could include another auction or tender to divide each oil field among US producers.
According to a Bloomberg report, the lease model that has been discussed will be for 100 years in several oil fields. However, citing sources, the report added that the terms of the deal could change.
Reuters, citing experts, said that while the full details of the proposed deal are not yet known, it could raise constitutional questions and face legal challenges.
Read also | Venezuela is considering leaving OPEC after decades as it deepens ties with the US
The development comes as Venezuela considers leaving the Organization of the Petroleum Exporting Countries (OPEC) as it strengthens ties with the US. Venezuela, which joined as a founding member in 1960, has reportedly been missing OPEC quotas for years as its state-run oil industry suffers from neglect and corruption. Separately, Washington has been at odds with OPEC over its influence on oil prices for several years.
Reuters reviewed the list of 17 oil fields under discussion, which includes undeveloped fields in the vast Orinoco belt as well as mature assets in Lake Maracaibo. Some of these fields are currently being operated by a small Chinese company under a contract signed under Nicolás Maduro’s government.
US-Venezuela strengthen ties after Maduro’s capture
The proposed deal comes months after Washington captured and removed former Venezuelan President Nicolas Maduro from power in January, after which the US has tried to ensure a steady flow of Venezuelan oil to US refineries while boosting US investment in Caracas’ ailing energy industry, which currently produces about 1.25 million barrels of oil a day.
Separately, the Trump administration is under intense pressure over rising gasoline prices ahead of the November midterms. If a deal is reached, the move would bring down gasoline prices through cheaper crude supplies and expanded production.
Meanwhile, Washington is also looking for solutions to replenish its oil reserves, the Strategic Petroleum Reserve (SPR), including the possibility of oil swaps with US producers.
The SPR has about 290 million barrels stored in underground salt caverns, leaving about 41 percent of its maximum capacity. Budget constraints and maintenance work have slowed efforts to replenish supplies after the U.S. depleted its reserves following Russia’s invasion of Ukraine in 2022 and again when the Iran war began in February.
A Bloomberg report suggests that since Maduro’s capture, the U.S. has been in control of Venezuela’s oil sales as it eased sanctions to allow U.S. companies and oilfield suppliers to conduct business in the country. Washington has not yet disclosed how much revenue has been generated so far from the sale of Venezuelan oil.
