(Sept 1): US President Donald Trump’s White House has called it the “biggest oil deal in history". An agreement with Venezuela for the US to take control of more than 65 billion barrels of the nation’s crude reserves.
The pact — which has drawn criticism from hard-liners and opposition forces in Venezuela — will ensure a supply of low-cost crude to the US, according to a White House factsheet released on Monday. It was signed by US Secretary of State Marco Rubio and US Defence Secretary Pete Hegseth.
The potential flows of crude to the US, underpinned by an expected surge in Venezuelan production, will be used to refill the Strategic Petroleum Reserve, according to the release. It also stands to boost business for US refineries and oil field equipment makers.
“This deal secures our energy dominance for the next century — all at zero cost to the United States,” the White House said. The agreement will forge “robust, strategic and defensible supply chains in our hemisphere", effectively pushing out Russian and Chinese companies, it added.
Here’s a look at the key points in the factsheet on how the agreement will be structured, what it may mean for the US and Venezuela, and how it is supposed to fit the administration’s plans to extend its influence in Latin America.
How the deal is structured:
- Venezuela’s interim authorities have granted North American Blue Energy Partners (Nabep), a privately-held company, 100-year concessions for 17 oil fields with proven reserves of approximately 65 billion barrels.
- In turn, Nabep granted the US Office of Strategic Capital a 35% equity stake in its corporate parent. That represents “up to hundreds of billions in value and dividends for the United States", according to the factsheet.
- Nabep also granted the US State Department the right to purchase, at production cost, 20% of the off-take from all current and future fields that Nabep operates. That crude oil could help refill the US Strategic Petroleum Reserve.
- The State Department also has the right of first refusal to buy the remaining 80% of Nabep’s production. That could provide a “guaranteed source of energy in our hemisphere in emergency situations,” the White House said.
- The US has veto power over the appointment of Nabep directors, a majority of whom must be US citizens. The agreement is governed by US law and subject to the jurisdiction of its courts.
What it may mean for Venezuela:
- Nabep plans to boost production by investing up to US$100 billion (RM403.6 billion) in new oil infrastructure. That will help to drive economic growth, support thousands of jobs in Venezuela, and underpin broader activity, the White House said.
- Nabep’s concessions are governed by Venezuela’s new hydrocarbons law, which was introduced with US support. Over the first quarter century, it is expected that Nabep will pay US$200 billion in royalty and tax payments.
- For access to potential funding, Nabep “will be able to raise private American capital to fund capital expenditures”.
- US oversight, “will ensure tax and royalty payments are spent in the interests of the Venezuelan people”.
And the hemisphere:
- US President Trump has re-established the Monroe Doctrine, according to the release, referring to an approach from Washington that warns other powers against seeking to interfere in the so-called Western Hemisphere.
- The majority of the fields to be operated by Nabep were previously controlled or operated by Russian and Chinese firms or by associates of former Venezuelan presidents Nicolás Maduro and Hugo Chávez.
- The US is constructing robust, strategic and defensible supply chains in the hemisphere to support its manufacturing and energy.
Uploaded by Arion Yeow