Venezuela Oil Deal Sparks Concern Over Production Timeline

A new U.S.-Venezuela oil deal has been announced, giving American companies control over 55% of Venezuela's 65 billion-barrel proven reserves under a 25-year lease. The deal is valued at over $100 billion in investment, with Chevron, Exxon Mobil, and ConocoPhillips among the prospective participants.

However, energy expert Brian Sullivan warns that investors may be misjudging when production will begin, citing Venezuela's decades-long production collapse. The country has been producing only 1.2 million barrels per day, down from a peak of 3.2 million in 1997. Sullivan notes that the oil will 'sit under the ground' if there is no capital and expertise to extract it.

The deal also raises questions about who controls the Venezuelan counterparty and the potential for legal complications. Ali Moshiri, former President of Chevron Africa and Latin America, advocated a public-private partnership due to Venezuela's need for specialized technology to handle its heavy and extra-heavy crude.