Venezuela–US Oil Pact: A Three-Layer Framework for 64 Billion Barrels

The sweeping oil production agreement between Venezuela and the United States, announced last week, is built on a complex three-layer structure designed to develop at least part of the 64 billion barrels of proved reserves across 17 oilfields. If fully realised, the pact would immediately supply the US with a base volume of exportable Venezuelan crude from mature fields, with total production eventually rising to 1.5 million barrels per day (bpd), according to authorities.

Government-to-Government Layer The first layer is the bilateral pact negotiated over months. Its stated goals include securing US access to the oilfields through a partnership with private business, ensuring most production is shipped to the US for energy security, and building a long-term relationship with the fields' operator. The full text has not been released, and may not be soon, as a recent reform of Venezuela's main oil law removed the National Assembly's mandatory oversight over energy contracts deemed in the national interest. Legal experts warn the pact could face court challenges due to its long duration, lack of approval by other institutions in both countries, and the absence of a competitive bidding process.

Partnership in Venezuela Venezuela's hydrocarbons law permits only two production models: joint ventures and production-sharing contracts. Joint ventures allow equity and reserve booking for 25 years plus a 15-year extension, while production-sharing deals have no fixed duration but no equity rights. It remains unclear which model North American Blue Energy Partners (NABEP)—the US company chosen by Washington—will adopt. Any structure requires a partnership with Venezuela's state-run PDVSA. NABEP, previously owned by US oil tycoon Harry Sargeant and now controlled by Venezuelan businessman Alejandro Betancourt, has partnered with PDVSA for years. A new joint venture could absorb and expand NABEP's existing projects, providing a base of exportable output.

Equity Transaction in the US The most intricate part involves the US securing participation in NABEP's Venezuelan operations. According to President Trump, the umbrella deal was negotiated by Venezuela's interim President Delcy Rodriguez, US Secretary of State Marco Rubio, and US Secretary of Defense Pete Hegseth, with the Department of Energy excluded. Reports indicate the Pentagon plans to take a 35% passive stake in the private company holding the rights, with the Defense Department's Office of Strategic Capital structuring the investment through "penny warrants"—giving equity without significant upfront capital. The US has also negotiated rights to an additional 20% of total output, which could help replenish the Strategic Petroleum Reserve.

Many doubts about the deal's legality and operational feasibility remain unresolved, and its ultimate shape will depend on how these three layers are finalised.