Trump's Venezuela oil agreement faces mounting challenges as ambitious production targets meet industry realities
By Jahanzaib Saqib — SCN NEWS
HOUSTON/MARACAIBO — President Donald Trump's agreement to develop 17 Venezuelan oilfields is facing growing questions over its commercial viability as contractors report payment difficulties, aging production facilities require extensive repairs and industry specialists challenge whether the project's ambitious output targets can be achieved within the proposed timeframe.
The agreement, promoted by Trump as the largest oil deal in history, places vast Venezuelan petroleum resources under the operational control of North American Blue Energy Partners, a relatively little-known company led by Venezuelan businessman Alejandro Betancourt. The arrangement gives the United States a 35% ownership interest in the company's parent organization and the right to purchase 20% of its oil production at cost.
NABEP has pledged to increase production from approximately 224,000 barrels per day in mid-October to more than one million barrels daily, a target that would require substantial investment in drilling equipment, electricity generation, transportation infrastructure and skilled personnel.
A Reuters investigation involving interviews with 15 oil workers, contractors, financiers and industry specialists identified significant operational difficulties across the company's projects. Eight people familiar with its activities described outstanding contractor payments, shortages of experienced workers and delays in restoring production facilities.
The company disputes suggestions that the development programme is falling behind schedule. Its spokesperson, Terry Wade, said NABEP was expanding its supplier network, implementing a new payment system and maintaining its production objectives.
The agreement represents one of the Trump administration's most consequential attempts to expand American commercial influence over Venezuela's petroleum sector following the removal of former President Nicolas Maduro by U.S. military forces in January.
Venezuela possesses some of the world's largest proven oil reserves, but decades of underinvestment, economic instability, sanctions and deteriorating infrastructure have weakened the country's ability to translate those resources into sustained production.
Trump has highlighted an estimated 64 billion barrels of oil associated with the 17 fields as evidence of the agreement's economic significance. However, the amount of petroleum potentially contained underground differs substantially from the quantity that can be commercially extracted within a project's operating period.
Francisco Monaldi, director of the Latin America Energy Program at Rice University's Baker Institute, estimated that approximately 10 billion barrels could realistically be developed during the 25-year period permitted under Venezuelan law, provided favorable technical and commercial conditions are achieved.
That assessment raises questions about the relationship between the agreement's advertised reserves and its potential economic returns. Developing petroleum resources requires not only sufficient reserves but also commercially viable extraction costs, reliable infrastructure, skilled workers and access to financing.
NABEP entered Venezuela's petroleum industry in 2024 through three projects negotiated under the Maduro government. It expanded significantly on October 1, when it assumed operational responsibility for another 14 fields through agreements with Venezuelan authorities.
The rapid expansion has left the company responsible for projects at different stages of development, including producing fields requiring rehabilitation and undeveloped areas where roads, drilling facilities and other essential infrastructure remain limited or nonexistent.
Conditions are particularly challenging in the Maracaibo basin, one of Venezuela's oldest oil-producing regions. Approximately 80% of the basin's estimated 4,000 inactive wells require repairs, according to figures cited by officials at state-owned oil company PDVSA.
At Petrozamora, workers described deteriorated installations, inactive heavy machinery, oil leaks and delayed supplier payments. Such conditions complicate efforts to restore production because existing wells may require extensive maintenance before additional drilling can begin.
NABEP said it had introduced improvements at Petrozamora and installed equipment on Lake Maracaibo. During a visit to the facility last week, Betancourt said production had increased from approximately 98,000 barrels per day in September to 115,000 barrels, citing internal PDVSA figures.
The company is also concentrating expansion efforts on Junin Sur in Venezuela's Orinoco Belt, where substantial heavy crude deposits offer opportunities for increased output but require specialized extraction and transportation systems.
Satellite analysis conducted in early October found no drilling infrastructure at seven of the 17 fields. Six of the company's newly acquired areas are largely undeveloped, creating additional requirements for roads, electricity supplies, drilling equipment and operational facilities.
NABEP says it has arranged for 60 drilling rigs and 70 pieces of heavy machinery to be delivered in stages. It reports that three drilling rigs are operating in the Orinoco region, with three additional rigs expected, alongside equipment intended to restore production at existing wells.
The company says it directly employs approximately 5,000 people and works with more than 10,000 contractors. It has also recruited administrative personnel from PDVSA as it attempts to expand operations across several production regions simultaneously.
Financing remains another significant consideration. NABEP says it has invested approximately $1 billion of its own capital since 2024 and intends to increase annual reinvestment by as much as 50% to support future production growth.
Wade said the company's business plan does not depend on raising outside financing or selling additional equity interests. Nevertheless, industry specialists interviewed by Reuters questioned whether the simultaneous development of 17 major fields could be sustained without substantial additional financial and technical resources.
Five energy industry experts said the scale of the undertaking would present significant difficulties even for established international producers with extensive experience operating large petroleum projects.
NABEP's ability to secure banking services has also attracted scrutiny because of previous investigations involving Betancourt's business activities.
The businessman was investigated in the United States over allegations involving funds allegedly diverted from PDVSA, while Swiss authorities also examined suspected money-laundering activities. The U.S. investigation was paused earlier this year, and Betancourt has not been charged with a crime in any jurisdiction.
Three people familiar with the company's activities told Reuters that the investigations had complicated efforts to establish banking relationships. NABEP maintains that it has access to international financial institutions.
The agreement's political and commercial terms have also prompted questions in Venezuela, where opposition figures have called for greater transparency about the allocation of national petroleum resources.
Opposition leader Maria Corina Machado, who returned to Venezuela this week, said Thursday that she had not reviewed the agreement and questioned whether its terms had been sufficiently disclosed to the public.
Interim President Delcy Rodriguez has defended the arrangement, while PDVSA Vice President Jovanny Martinez said this week that NABEP could reach its target of one million barrels per day within six to seven years.
Venezuela's overall crude production has remained near 1.2 million barrels daily in recent months, according to official figures, underscoring the scale of the increase NABEP is seeking from its own operations.
The White House has maintained that the agreement is already producing economic benefits for the United States. Spokeswoman Taylor Rogers said production was increasing and defended the arrangement as beneficial to American interests.
The commercial relationship drew additional attention Tuesday when the first shipment of one million barrels of Venezuelan crude arrived in Corpus Christi, Texas.
Trump described the shipment as a gift to the United States, and a White House official said the government had received the oil without payment.
NABEP initially characterized the delivery as part of Washington's contractual right to purchase a portion of production at cost. The company subsequently said it had provided the shipment without charge to recognize the significance of the agreement.
The differing descriptions highlighted the unusual relationship between the private operator and the U.S. government, which holds an ownership interest in the company's parent organization while retaining preferential purchasing rights.
The arrangement places Washington in a position to benefit directly from Venezuelan petroleum production, but its longer-term economic value will depend on the volume of commercially recoverable oil, the cost of expanding operations and the ability of the company to meet its contractual obligations.
For Venezuela, the agreement offers the prospect of investment in a petroleum industry weakened by years of declining infrastructure and the departure of experienced technical personnel. Its success will also depend on whether production gains translate into sustained economic activity and improvements across the country's energy sector.
For the Trump administration, the immediate test is whether the production increases promised under the agreement can be delivered on a commercially sustainable basis.
NABEP insists that its expansion remains on schedule, but the combination of deteriorated oilfields, financing questions, equipment shortages and demanding production targets leaves substantial uncertainty surrounding the eventual scale and profitability of the project.