HOUSTON/CARACAS, Aug 31 (Reuters) – A massive long-term oil deal expected to grant the U.S. access to a fifth of Venezuela’s crude reserves has energy experts and lawyers questioning its legality and eventual execution, while calling on both governments for contract transparency.
The unprecedented pact, announced by U.S. President Donald Trump on Friday and confirmed by Venezuela’s interim President Delcy Rodriguez, will put a whopping 65 billion barrels of recoverable oil under Washington’s control, a volume that surpasses total U.S. proved oil reserves of 46 billion barrels.
The agreement did not pass through a competitive process, and its negotiation remained a secret until last week, even amid a sweeping reform of Venezuela’s primary hydrocarbons law and the migration of dozens of joint ventures and contracts to new terms, which authorities and operators have not completed.
While Trump said in a social media post last week that the deal would involve “a partnership with private business,” the U.S. has not disclosed which companies are lining up to operate the oilfields on its behalf.
North American Blue Energy Partners (NABEP), a company led by controversial Venezuelan investor Alejandro Betancourt that has been acting as a bridge between Caracas and Washington, told the New York Times that it is looking forward to working with the U.S. amid media reports that the company is set to be involved in the deal.
“If the goal was to try to reduce the risk of investing in Venezuela, the United States might be doing the exact opposite with this transaction: further weakening the country’s already fragile institutional framework,” said Luisa Palacios, adjunct senior research scholar at Columbia University’s Center on Global Energy Policy.
According to Venezuelan interim President Rodriguez, the pact will last at least 25 years, in line with the OPEC country’s Hydrocarbons Law, securing $100 billion in investment and $209.3 billion in royalties and taxes, which would leave some $19 in Venezuela’s hands from each barrel produced.
Experts have expressed doubts over the deal’s legality, especially since the U.S., not Venezuela, is set to select the model and companies to operate the fields.
“Despite being formally recognized by the U.S., the agreement can be brought to court in the future,” said Juan Carlos Apitz, head of Central University of Venezuela’s law faculty.
The White House referred Reuters questions to the U.S. Department of Energy, which did not reply to a request for comment.
