Venezuela has possibly the largest oil reserves in the world — though it hasn’t produced much in recent years. The Trump administration hopes to change that.
President Trump announced on Friday that the United States had entered an agreement with Venezuela and a private oil company to “secure majority control” of 65 billion barrels of the country’s oil, or about a fifth of its reserves.
The deal is highly unusual because the U.S. government generally leaves oil exploration to private companies and does not take stakes in those businesses. It is also an ambitious project that is likely to take years to bear fruit given Venezuela’s dilapidated infrastructure, widespread corruption and unstable politics.
Here’s what you need to know about Venezuelan oil.
Venezuela has a lot of oil.
Venezuela sits on more than 300 billion barrels of “proven oil reserves” — or oil that could be extracted at a profit — according to Oil & Gas Journal, which compiles data submitted by governments around the world.
By comparison, the United States, the world’s top oil producer, had 81 billion barrels of crude oil reserves last year, according to the journal.
Many experts say the Venezuelan reserve figures are overly optimistic because they are based on unrealistic assumptions about how much oil could be profitably recovered.
Still, most people in the industry agree that Venezuela is sitting on a lot of oil.
The Venezuelan government has owned the country’s oil reserves since the oil industry was nationalized in the 1970s. But the state-owned company, Petróleos de Venezuela, or PDVSA, has been unable to exploit those resources, said Miguel R. Tinker Salas, a professor of Latin American history at Pomona College.
“You had rampant corruption to the point where workers were taking equipment and selling it on the surplus market because they weren’t getting paid,” he said. “And then you had U.S. sanctions — and you can’t underestimate the role that U.S. actions played, because Venezuela could not get any credit on the world market.”
In the 1970s and ’90s, Venezuela was producing over three million barrels of oil a day. In July, according to estimates by the International Energy Agency, it produced 1.12 million barrels a day.
America’s relationship with Venezuelan oil has always been complicated.
The United States used to buy most of Venezuela’s oil, but that stopped in 2019 after the first Trump administration imposed more stringent sanctions on the country.
Shipments to the United States resumed in 2023 and increased after U.S. forces captured Nicolás Maduro, the country’s leader, in January. But volumes have remained low by historical standards.
Most of Venezuela’s crude in recent years has flowed to China.
Venezuelan oil is different from what’s found in the United States — it’s thicker and more viscous. This kind of “heavy” crude needs more energy and equipment to be refined, but many U.S. refineries are designed to process it.
Venezuela has seesawed between welcoming private oil companies and asserting state control over the industry. In the 1990s, the country opened itself to foreign investment.
But in 2007, Hugo Chávez, then the Venezuelan president, demanded that oil companies reduce their stakes in the country’s projects, without compensation. Companies like Chevron reached new agreements with the government, but others, like ConocoPhillips and Exxon Mobil, rejected the deals and left Venezuela. They have spent years trying to get the country to repay them for their seized assets, with little success.
The companies that stayed have made a bet that doing business in Venezuela, while difficult and costly, will eventually pay off.
Chevron is now in advanced talks to expand its operations in Venezuela. The company accounts for roughly a quarter of Venezuela’s production.
What does the new Trump deal mean for Venezuela and oil prices?
Under the deal announced by the Trump administration, the United States would have the right to acquire a 35 percent equity stake in the country’s second-largest private oil company, North American Blue Energy Partners.
And the U.S. government will have the right to buy 20 percent of oil produced at facilities operated by NABEP at the cost of producing that oil. The United States will also have the right to buy the remaining 80 percent of the oil.
Venezuela’s government has said the deal would increase tax revenue by around $200 billion. NABEP said it planned to invest $100 billion to increase oil production.
But many Venezuelans are skeptical and have expressed concerns about the deal.
NABEP currently produces around 200,000 barrels of oil a day. Boosting that to more than one million per day could take many years. As a result, the deal is unlikely to have any immediate impact on the price of oil or fuels like gasoline and diesel.
Rebecca F. Elliott contributed reporting.
