Aside from a social media post by US President Donald Trump, the White House has said little about what it calls “THE BIGGEST OIL DEAL IN WORLD HISTORY” in Venezuela. Trump said the deal announced Friday night would give the United States a stake in Venezuela’s vast oil reserves, a step toward his goal of extracting energy from the country after U.S. forces captured then-President Nicolas Maduro in a midnight raid in January and took him to New York to confront federal drug trafficking. charges. Venezuela’s interim president, Delcy Rodríguez, described the agreement as a step toward economic recovery that will modernize the country’s oil industry. But answers to questions such as when the reserves could be drilled and who will pay to make it happen were not immediately clear. No text of any agreement has been published. Here’s a look at what we know and what we don’t know, and how the deal could also affect Canada’s oil industry.WATCH | Trump announces deal on Venezuelan oil: Trump announces that Venezuela’s oil reserves will be controlled by the US. In a post on his Truth Social platform, US President Donald Trump announced a deal that would allow the United States to control more than 65 billion barrels of Venezuelan oil. What are the terms? The US government and an unnamed private operator in Venezuela formed a new private company that was given rights to vast untapped oil fields for 100 years. A statement from Rodríguez said the agreement involves the development of 17 fields with a proven potential of 65 billion barrels. He said the deal could attract $100 billion in investment to Venezuela’s oil industry and generate more than $209 billion in taxes for Caracas. Trump said the deal was negotiated by US Secretary of State Marco Rubio, Defense Secretary Pete Hegseth and Rodriguez. The agreement gives the United States 55 percent of the new private company’s effective production, including an ownership stake and rights to buy oil at cost. U.S. oil purchases will go toward U.S. strategic oil reserves along with the military, according to a U.S. official who was not authorized to discuss the matter publicly and spoke on condition of anonymity. The company would be the second largest corporation holding proven reserves after Saudi Aramco, according to the official. Rodríguez said the agreement will modernize the country’s oil industry. (Pedro Mattey/The Associated Press) Will gas prices go down? Probably not anytime soon. Trump says the deal will help lower gas prices for Americans, an important goal for the Republican president as the Iran war slows shipping of Persian Gulf oil and keeps prices elevated months before the U.S. midterm elections in November. But experts have repeatedly warned that Venezuela’s crumbling oil infrastructure will take years and billions of dollars to repair. A substantial increase in production is not expected to occur quickly. The deal could be “helpful in the long run, but it won’t do anything to change the price of gasoline at retail stations for Labor Day weekend,” said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Laboratory at New York University. Neither side made clear who would pay for infrastructure investments or at what cost. Kevin Book, managing director of ClearView Energy Partners, said Venezuela has room to take advantage of its oil production, which in the past produced more than 2.5 million barrels per day above current levels, but this type of investment is not happening quickly. “It doesn’t happen all at once. It’s going to take time (many years) to deploy that much capital and produce the kind of incremental results that history suggests are possible,” Book said. Trump pressures US oil companies to develop Venezuelan reserves: Trump pressures cautious US oil executives to move to Venezuela. President Donald Trump is urging top oil executives to act quickly in developing Venezuela’s vast oil reserves. But few seem willing to step in with both feet in the days after U.S. forces seized Venezuelan President Nicolás Maduro. What could the deal mean for Canada’s oil industry? While many details of the deal remain unclear, experts said earlier this year that a revival of Venezuelan oil production would hurt the Canadian oil industry. Canada and Venezuela produce similar heavy crude, and in recent decades, Canadian oil filled a gap in the U.S. market amid declining Venezuelan exports. crude oil in the U.S. Gulf Coast market,” TD Economics economist Marc Ercolao said in January after the U.S. said Venezuela would sell up to 50 million barrels of oil. The Gulf Coast accounts for about 10 percent of Canadian oil exports to the U.S., Ercolao said. Observers say a rapid, large-scale increase in Venezuelan oil production is unlikely after years of underinvestment, sanctions and political uncertainty. But even a gradual recovery “would reintroduce significant competition to the North American heavy crude market,” said Christopher Hernández-Roy, acting director of the Americas program at the Center for Strategic and International Studies in Washington, D.C. Canadian heavy crude is trading at a discount, or differential, to benchmark U.S. crude prices, Hernandez-Roy said in May. “In the long term, a significant increase in Venezuelan oil production could also strengthen Canada’s drive to diversify its trading partners and become less dependent on the US market,” TD Economics’ Ercolao said in January. Trump hailed the deal with Venezuela as ‘THE BIGGEST OIL DEAL IN WORLD HISTORY’ in a social media post. (Mark Schiefelbein/The Associated Press) What questions remain? The identity of the private operator, which will cover the necessary investments and how the US participation in the company is broken down, is still unclear. The United States will get 55 percent of the company’s effective production, but it was unclear how much of that comes from the ownership stake and how much comes from the right to buy oil at cost. It is also unclear how the industry will react. Persuading big American oil companies to return to the region could prove challenging given political uncertainty and damaged infrastructure. Chevron, the only U.S. oil company actively producing in Venezuela, declined to comment. Aside from Trump’s announcement, Chevron had already been in talks to expand investment in the country. Exxon Mobil also declined to comment. David Oxley, chief climate and commodities economist at Capital Economics, said at first glance the deal could double U.S. oil reserves and reduce dependence on crude oil from Canada and Mexico. But Oxley, in a commentary, warned that there are logistical obstacles and said the value of Venezuela’s reserves may have been exaggerated during the government of former President Hugo Chávez. Even with legal and security guarantees, it is not clear that American oil companies “would be eager” to invest,” he wrote, noting that “there may simply be more attractive business opportunities elsewhere.”
