US-Venezuela Pact Seeks Record Oil Output Boost

The US and Venezuela have signed a binational oil agreement that aims to increase oil production from 17 strategic fields by over 1.5 million barrels per day, according to Venezuelan Interim President Delcy Rodriguez.

The agreement, which has a 25-year term, is expected to generate more than $100 billion in investment and $209 billion in tax revenue for the Venezuelan state, with nearly $19 going directly to Venezuela for every barrel produced and sold at a price of $65 per barrel.

Rodriguez explained that the project includes eight new greenfield blocks in the Orinoco Oil Belt, carrying minimum royalties of 16% and a 34% income tax, which is sharper than the fiscal term applied three decades ago when Venezuela last opened four greenfield Orinoco blocks to foreign partners.

The agreement has drawn scrutiny from legal experts, who raised questions about its basis under Venezuela's constitution and hydrocarbons law. Analysts at ClearView Energy Partners said that the structure of the deal remains unclear and outlined three possible investment models that Washington could pursue.