Trump Plan May Derail Venezuela's Oil Recovery with Special Deal for One Company

The US government's plan to give one company privileged access to Venezuela's oil reserves could slow down the recovery of its energy sector. The deal would see Washington acquire a 35% stake in North American Blue Energy Partners, a private oil company controlled by Venezuelan businessman Alejandro Betancourt.

Under the arrangement, 'North American Blue Energy Partners' would receive a 100-year lease on 17 oil fields with combined reserves estimated at 65 billion barrels. In return, the US would be guaranteed a 20% share of production at cost and the right of first refusal to purchase all remaining oil.

However, critics argue that this deal could weaken competition, distort the market, and deter foreign investors without whom restoring production would be extremely difficult. The plan creates commercial risks, particularly the possibility of dividing Venezuela's oil sector into two tiers, where 'North American Blue Energy Partners' and the US government receive special terms while others have to buy and sell at normal prices.

Reviving the oil industry will require decades and billions of dollars, as production has fallen from 3.5 million barrels per day in the 1990s to around 1 million barrels today. Estimates suggest that production could rise to 1.5 million barrels per day over the next two years, but increasing production is only part of the challenge.