Trump says US is taking partial control of Venezuela's vast oil reserves

By Jarrett Renshaw

Aug 28 (Reuters) - President Donald Trump on Friday announced ‌an unprecedented U.S. push to ​take control of ​a fifth of Venezuela's vast oil reserves, betting that American companies can revive the OPEC nation's battered energy industry while delivering a new source of crude to help bring down U.S. fuel prices.

Trump provided few details about the agreement, saying only that the U.S. had secured majority control ‌of more than 65 billion barrels of Venezuela's proven oil reserves through a partnership with private business.

"At my direction, Secretary of State ⁠Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority U.S. control of more than 65 BILLION ‌BARRELS of proven Oil Reserves in Venezuela, at ‌no cost to the American Taxpayer," Trump wrote on Truth Social.

The announcement followed weeks of U.S.-Venezuelan negotiations over a deal that would give American companies long-term access to a group of Venezuelan oilfields and guarantee the resulting crude supply to the United States.

Venezuelan officials are preparing to sign agreements next week granting new oil exploration ​and production rights to a number of companies, particularly U.S. firms.

Sources previously told Reuters that a lease model was under consideration, with fields potentially auctioned to U.S. producers, but the arrangement could face legal and constitutional challenges in Venezuela, where the state retains control over core oil industry activities.

The new deal would represent a dramatic ⁠expansion of the U.S. role in Venezuela's oil industry as the Trump administration seeks to revive the country's production and secure more crude for U.S. refineries. Venezuela holds the world's largest proven oil reserves but produces only about ​1.25 million barrels per day, far below its potential after years of underinvestment, mismanagement and sanctions.

Trump did not disclose the structure of the agreement, the fields or companies involved nor how the United States would exercise majority control over the reserves.

Secretary of State ​Marco Rubio described the agreement as a win for both countries, saying on X that it ‌would secure stable, low-cost oil for the United States and help lower gasoline prices.

For Venezuela, Rubio said the deal would bring nearly $100 billion in private investment, support thousands of high-paying jobs and help rebuild the country's economy.

LEGAL BASIS UNCLEAR

Analysts said they needed to see more ⁠details on the agreement's legal and financial structure before assessing whether it could attract significant investment.

Prospects were unclear for the deal to lower gasoline prices in the short term, as developing the infrastructure needed to produce, transport and refine Venezuela's heavy crude could take years.

David Goldwyn, president of Goldwyn Global Strategies, said it was unclear whether a U.S. government lease would have a legal basis under ⁠Venezuela's constitution and new hydrocarbons law, adding that there is "no precedent for having the U.S. government enter into a lease to operate oil fields."

Goldwyn also questioned whether the plan would address the obstacles ​that have deterred investment in Venezuela for years. "It is hard to see how this kind of arrangement would accelerate investment at any material scale," he said, citing political uncertainty, an inadequate power grid, limited export capacity and government discretion over the industry.

Since the U.S. captured and removed former President Nicolas Maduro from power in January, Washington has been trying to secure a stable flow ‌of Venezuelan crude for U.S. refineries while promoting American investment in the country's oil industry.

The Trump administration is under pressure ahead of midterm elections in November to mollify consumer concerns over rising gasoline prices. Cheaper oil supplies and expanded output could help.

The U.S. also ‌has been looking for solutions to replenish its Strategic Petroleum Reserve, the oil stockpile, including the possibility of crude swaps with U.S. producers.

Venezuela nationalized its oil industry in the 1970s, putting state-run ⁠PDVSA at its center. Under former President Hugo Chavez, the government tightened ‌control, forcing foreign producers into state-led joint ventures and ​later expropriating assets, including projects operated by Exxon Mobil and ConocoPhillips .

Under Maduro, years of underinvestment, mismanagement, political turmoil and U.S. sanctions drove Venezuela's production sharply lower.

(Reporting by Jarrett Renshaw, Costas Pitas, Christian Martinez, Marianna Parraga and Timothy Gardner; Editing by Jasper Ward, Caitlin Webber, Rosalba O'Brien, Nathan Crooks ‌and Cynthia Osterman)

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