Trump’s Venezuela deal helps his rich friends—and that’s it

The Trump administration announced an arrangement with Venezuela last week that would see the US take control of 65 billion barrels worth of oil fields and a significant share of the country’s production of 800,000 barrels of oil per day—the latest development after an American strike on Caracas abducted the country’s president Nicolás Maduro in January.

According to the White House statement, Venezuela will grant a firm called North American Blue Energy Partners, rights to 17 oil fields for 100 years; that company will give the Pentagon a 35 percent stake in its corporate parent and the State Department the ability to buy 20 percent of its oil, with right of first refusal for the remaining 80 percent. The US government can also veto any appointment to NABEP’s board of directors.

The deal is one of the public-private partnerships that have become customary in Donald Trump’s foreign relations. But its workings in practice, and diplomatic and corporate reactions to the deal, are unclear at best. Just days after the White House announcement, Chevron said it would expand its operations in Venezuela. But Chevron is already the largest foreign oil operator in the country, and others have indicated that the uncertainty of Trump’s plan, let alone how long the process of scaling up production would take, has made them hesitant to invest.

What is clear is that the oil deal is a direct seizure of another country’s resources under threat of force, what political scientist Jeff Colgan, who directs the Climate Solutions Lab at Brown University’s Watson Institute for Public and International Affairs, calls “petro-imperialism.”

In March, I spoke with Colgan, who has long studied the role of oil in international politics and war about how the idea of military intervention in global oil markets to support the US oil industry informed Trump’s actions in Iran. A similar pattern is in evidence again in Venezuela.

Trump has publicly signaled that he is interested in making Venezuela the 51st state, and according to reports Tuesday, is seeking more access to the country’s minerals, including gold. To better understand what to make of all of this, I spoke with Colgan again last week.

Much isn’t known about Trump’s agreement to secure partial control of Venezuela’s oil industry. What are you watching out for?

I’m keeping an eye on the different ways the Venezuelan government and the US government are describing the deal, because of course, their two audiences want very different things, and I’m not sure how easy it’s going to be for politicians to try to square that circle.

Already, you see significant criticism from the political opposition in Venezuela [led by officials like conservative María Corina Machado], and even from some of the old [Nicolás] Maduro regime members saying, “This oil is ours, we don’t want to give it to the United States, and this is a form of neo-colonialism.” 

There’s also criticism of the interim president in Venezuela [Delcy Rodríguez] for making this deal. She, of course, is trying to finesse that by saying, “Look, this is an arrangement that will bring in American investment into an oil sector that really needs it,” because [Venezuela’s oil industry] has been inefficiently run for 20 years or so. It is true on some level, but American dollars going into the Venezuelan oil sector is different from what President Trump is telling Americans—that this is going to be a great deal by which Americans get access to Venezuelan oil at zero cost to American taxpayers. Those two messages seem fundamentally incompatible.

The Trump administration claims that Venezuelan oil will lower American gas prices amid the war in Iran. What do you think?

I think the argument is complete nonsense. Yes, there might be new investment that comes in, but then you’re really talking about production that is years down the road. And because the oil system is very globally integrated, what happens in Venezuela is not going to lead in a direct fashion to lower prices for Americans. In fact, if anything, more investment in Venezuela might drive out investment in the rest of the world as companies react to wherever they think is the most profitable approach to meeting oil demand. They can cancel or just not make investments elsewhere in the world. 

The disruption in [the Strait of] Hormuz is going to affect oil prices in the next few years, well before any new Venezuelan production.

Are there any historical comparisons to what we know about the Trump administration’s oil deal? I know a British company owned a lot of Iran’s oil sector before Iran nationalized it in the 1950s.

I think the comparison to Iran is a good one. The Anglo-Iranian oil company, which today we know as BP, did control the Iranian oil sector and made all the decisions about it from London rather than on behalf of Iranians. That’s one of the reasons, of course, why you had [Mohammad] Mosaddegh get elected [as prime minister of Iran] in 1951 and a coup against him in 1953 as he tried to nationalize the oil sector, and that continues to be a grievance that Iranians feel against both Britain and the United States as evil overlords of their oil sector.

Another is PDVSA, the Venezuelan national oil company that was created out of mostly American oil companies. It used to be Exxon, Mobil, [what is now] Chevron, [and others]. These companies were operating Venezuela’s oil sector until, in 1976, the government nationalized them, saying “okay, everybody who’s currently working for those companies: now you’re working for PDVSA.” And they showed up to the same office the same the next day doing the same job, just for a different company. 

It very much was an American institution. It was nationalised, and since the ’70s, Venezuela has tried to close the sector off and concentrate the profits of the oil sector in Venezuela. That only works for so long, and they need more foreign investment. So then they open the sector back up and close it again every 10 or 15 years. 

Now we’re in a new phase of [Venezuela] needing foreign investment to reinvigorate their oil sector. But there are good and bad ways of doing this, and this is one that is very likely to be seen by Venezuelans as just Americans stealing Venezuelan oil. I think it would be hard to shape that perception because of the way that Maduro was taken out of the country and also because you have President Trump saying how this [deal] is acquiring all of these resources for America.

Is there anything else that jumps out to you in recent reporting on what the Trump administration is saying about the deal?

All of the relevant actors are aware that this is fundamentally political—that Trump wants to make a case that he is generating economic returns for America, and the best argument he’s going to be able to make is that those returns are coming in the future. There’s certainly not going to be any impact before the November elections, or even, frankly, the 2028 elections. 

The other main thing here is a story about who benefits. It’s not going to be the average American consumer, and it’s certainly not going to be the average Venezuelan. But it is going to line the pockets of some American companies, and in particular, we should be watching to see whether Trump’s own family takes a piece of this thing, as he and his family have with so many other foreign business arrangements. 

I continue to go back to this framing of “petro-imperialism,” where the US is turning its foreign policy in this new direction to extract resources and profits away from other countries in an old-fashioned, 19th-century imperialist mode. This is what this Venezuelan deal is doing. 

Based on the limited information we have now, how is the Venezuela deal different from other iterations of Trump’s petro-imperialism, like Iran?

Iran is very different because the US has not been able to acquire any of Iran’s oil resources. But in the early parts of the war, he did say before the new supreme leader had been chosen that the United States should have a say in who that person is [like Delcy Rodríguez in Venezuela]. [It’s] very much the same kind of petro-imperialistic thinking, where he wants to be able to control what another oil producer was doing. 

But it hasn’t worked. Iran has found a way to fight back, and the idea that the US is going to dictate who’s in charge of the Iranian government is completely off the table. That’s just not feasible, and the Trump administration would be very lucky to get back to the pre-war status quo in Iran, which I don’t think is going to happen.