The ‘Biggest Oil Deal in History’ Is Turning Off the Lights in Venezuela

CARACAS, Venezuela — The “biggest oil deal in history” was announced almost simultaneously by acting Venezuelan President Delcy Rodríguez and U.S. President Donald Trump on Aug. 28. However, many Venezuelans didn’t find out until the next day because massive blackouts — up to 16 hours a day and partly caused by increased oil production — kept them from scrolling the news.

At the United Nations a month later, Trump bragged that he had taken Venezuela’s “spoils,” while Rodríguez said the deal with the U.S. would contribute to resolving the energy needs of “the hemisphere and the international economy.” Venezuelans then asked: What about our energy needs and economy?

The oil deal, the legal and operational details of which are still unknown, covers the exploitation of 17 fields and 65 billion barrels, which equates to 20% of Venezuela’s total reserves — the world’s largest, at an estimated 303 billion barrels. U.S. companies will invest $100 billion in exploiting the fields, a figure which — according to Venezuelan government projections — would translate into more than $209 billion in tax revenue for Venezuela over the years of the contract.

The announcement sparked questions and criticism from different sectors of the country, with concerns about the lack of information and the impact on sovereignty. In response, Rodríguez tried to explain the deal’s benefits in a nationally televised address, noting, “How much does Venezuela receive? Based on a barrel price of $65 … revenue would reach $209.3 billion for the state. In concrete terms, this means that for every barrel produced and sold, about $19 goes to [Venezuela].”

Oil drives the Venezuelan economy. Currently, it accounts for 71% of the nation’s total exports, but now much of that revenue goes to the U.S. In the first quarter of this year, out of a total of $7.76 billion in exports, $5.5 billion came from oil activity. As the acting president’s address went on, many of us only had more doubts.

A few hours later, Venezuelan economist Francisco Rodríguez summed up some of the nation’s concerns: “Do the projected tax revenues … correspond to nominal amounts, inflation-adjusted amounts, or net present values? A nominal amount of $19 per barrel in 2051, the project’s final year, would correspond to a real value of about $9 today.”

“The $209 billion equates, over 25 years, to about $8.4 billion annually, a relatively low amount compared with the tax revenue Venezuela has collected in the past at similar production levels. The amount would be even lower if it corresponds to a nominal total.” According to Central Bank of Venezuela data, Venezuela took in a record $82.8 billion in 2008 alone from oil sales.

Contradictions

Trump later contradicted Delcy Rodríguez’s 25-year timeline, saying the deal would involve a century of concessions. Francisco Rodríguez, the economist, noted that extracting 65 billion barrels in 25 years would be impossible, due to lack of infrastructure. 

“What rights does the U.S. acquire over these resources after 25 years? Can a future Venezuelan government decide to withdraw from this deal if it doesn’t like it?” he asked.

And why wouldn’t they like it? Trump said on Truth Social that Venezuela will begin supplying the U.S. strategic oil reserve immediately through “a gift.” Nobody knows what that means exactly, but since the military intervention on Jan. 3, the revenue generated by the sale of Venezuelan oil — we don’t know how much that is either — is already “in the custody” of the U.S. Treasury.

“It doesn’t look like Venezuela will benefit broadly in the long term. It’s like being on floor minus-18 and going up to minus-10,” Venezuelan researcher Blas Regnault, who specializes in energy policy and oil governance, told Truthdig from The Hague, Netherlands.

“There could be an indirect reactivation of the economy because of the indirect jobs that may emerge in some regions. But let’s also keep in mind that the country has been 100% blockaded, suffocated, so any door that opens will bring some benefits, but this is not the benefit one would expect for a sovereign country,” he said. 

“That’s the other problem: There’s no sovereignty of any kind over the resource itself, over what’s being sold. On top of that, there’s a lot of opacity — you’re analyzing blind.”

This “opacity” is also illegal. Articles 150 and Article 187, Paragraph 9, of Venezuela’s Constitution state that contracts of national public interest with foreign states or entities require approval from the National Assembly. However, although the Assembly endorsed the announcement of the deal on Sept. 1, its president, Jorge Rodríguez, said it had not yet been “submitted” to the legislature. Then, a month later he said that “according to some legal experts, it doesn’t need to be reviewed.”

It’s clear that Venezuela is once again, as it was for much of the 20th century, a kind of “U.S. oil province,” Regnault says, “Recovering sovereignty won’t be easy because Venezuela is strategic to U.S. interests.”

“On top of that, the other side of the coin is that China has become a key player [globally]. Today the Chinese do what Saudi Arabia used to do when it cut production and pushed prices up. With this Strait of Hormuz crisis, after the naval blockade of Iran, it was discovered that China had more reserves than previously thought, and that kept the crisis from being bigger and the price from reaching $150.”

That is precisely why U.S. Secretary of State Marco Rubio celebrated the fact that several of the oil fields included in the deal were once “dominated by China and Russia and Iran.” At the same time, the U.S. government has decided to maintain sanctions against Venezuela, thereby preventing any new economic players. In fact, the U.S. Treasury Department, through its Office of Foreign Assets Control, updated its oil licensing policy for Venezuela in late September through Orders 46E, 48D and 49B, which benefit U.S. businesses but maintain an absolute ban on Russia, Iran, Cuba, North Korea and China.

“The [Venezuelan] government has already amended the Hydrocarbons Law to try to create more favorable conditions for investors in the oil and gas sector, but … the [U.S.’] problem isn’t domestic supply. They need to monopolize the world’s energy reserves, markets and prices in order to prevail in the rest of their economic activities,” oil expert David Paravisini explains to Truthdig from Caracas, referring to a legal reform that was passed on Jan. 29 and created the possibility of technical and operational management and direct commercialization by private companies. He believes that for Venezuela, the deal is a diplomatic “quest” to survive. 

Trump is also maintaining some of his domestic support by presenting Venezuela as the great economic and geopolitical victory of his administration, especially after the war against Iran — which was supposed to last “only a couple of weeks” — reached the six-month mark and cost more than $37.5 billion through the end of July. In fact, Trump has claimed again and again that this oil deal will lower fuel costs inside the U.S. and come “at no cost whatsoever to the American taxpayer.””

Does this mean the $100 billion investment will come from private companies? The deal also aims to exploit eight greenfield blocks, areas where crude has been identified but which have not yet been developed. But what happens if that investment does not materialize? Since Jan. 9, Trump has been trying, without success, to persuade U.S. oil companies to invest in Venezuela.

Corruption is fine if the U.S. profits

So far, the only company we’ve heard about is North American Blue Energy Partners (NABEP), which was selected on Aug. 31 by the Trump administration to lead oil extraction projects in the 17 Venezuelan fields.

According to the White House, the Department of Defense will hold a 35% equity stake in NABEP and, in addition, the Barbados-registered company will grant Washington the right to buy 20% of the oil it produces at the cost of production.

NABEP, which has only operated in Venezuela for two years, was awarded the deal without a prior bidding process. The company belongs to Venezuelan businessperson Alejandro Betancourt, who was under investigation by federal prosecutors in Florida until January 2026 for allegedly laundering more than $1 billion from the state-owned Petróleos de Venezuela (PDVSA). The case was then closed suddenly under the orders of U.S. Deputy Attorney General Todd Blanche (now the attorney general), after a decade-long investigation. He is still the subject of open investigations in Switzerland and Spain.

Betancourt comes from a middle-class family but studied at the private religious school Instituto Cumbres de Caracas, where he befriended Javier Alvarado Pardi, son of Javier Alvarado Ochoa, who later became president of Electricidad de Caracas, deputy energy minister and a PDVSA executive.

Back in 2009, Alvarado Ochoa presented Betancourt and his engineering firm, Derwick Associates, as the best solution to Venezuela’s power generation crisis. Betancourt went on to receive 12 government contracts, awarded without competitive bidding, worth a total of $5 billion, which were either never completed or were implemented improperly, according to Transparency Venezuela and the Organized Crime and Corruption Reporting Project (which is funded by the U.S. government, among other countries).

So why Betancourt? Rubio said that he is no longer under investigation by the U.S., has supported the Venezuelan opposition and he has demonstrated his ability to produce oil. In that vein, NABEP claims it produces 200,000 barrels of crude a day, just behind Chevron.

However, Victor Hugo Majano, a Venezuelan investigative journalist and director of the well-known outlet La Tabla, told Truthdig that Betancourt overbilled the Venezuelan state by billions of dollars for power plants that never worked. He cited information from Thor Halvorssen, an anti-Chavista activist and cousin of Venezuelan opposition leader Leopoldo López. With that money, Betancourt bought a Dassault Falcon private jet and the historic Alamíin Castle in Spain.

Halvorssen also says Betancourt, who is also linked to 50 companies spread across 15 countries, paid former New York prosecutor Adam S. Kaufmann to halt prosecutions; former Wall Street Journal reporters to discredit whistleblowers; and former New York City Mayor Rudy Giuliani to bring the U.S. Justice Department over to his side.

“Despite this, the U.S. still doesn’t attack Venezuelan corruption. They want to protect the dollar and the U.S. financial system. They are only worried about securing capital flow, money that is not controlled by the state, the [Venezuelan] government,” Majano said.

More oil for the U.S., less electricity for Venezuela

Meanwhile, Venezuelans are paying the price for both Betancourt’s alleged corruption and the oil deal. So far this year, oil production has increased by 29.9%, going from 924,000 barrels per day (bpd) in January to an average of 1.2 million bpd. The increase has been driven by the need to deliver oil to U.S. companies, and it has directly worsened the nation’s electricity crisis.

Authorities acknowledge this; Venezuela’s interior minister, Diosdado Cabello, said in May the country is seeing higher electricity demand due to the growth in oil production, which “is a very serious problem.” The Ministry of Electrical Energy also noted that demand has reached 15,625 megawatts (MW), “the highest energy consumption figure in the last eight years, an increase of 3.6% compared with the peak reported in 2025.”

However, this statement omits that Venezuela actually has a nominal installed capacity of approximately 35,000 MW, double the country’s peak demand, but stable real generation barely reaches 11,000 MW. This shortfall is a result of both U.S. sanctions and domestic corruption, which together have led to disinvestment, lack of maintenance, fuel shortages (plants designed to run on natural gas have been forced to use low-quality diesel) and transmission problems.

Where does oil production come in? Víctor Poleo, an electrical engineer and former vice minister of Energy and Mines from 1999 to 2001, told Truthdig that “the national oil industry uses up about 1,500 MW, of which about 250 MW is self-generated, but another 1,250 MW is taken from the national interconnected system. This draw is 24/7 and must be continuous in order to carry out crude extraction, transport, pumps and compressors and refining.”

Poleo, who bases his analysis on studies by fellow electrical engineer Nelson Hernández, says light, medium and heavy crudes are estimated to require between 9 kilowatt-hours and 15 kilowatt-hours per barrel to produce. For extra-heavy Orinoco crudes, the estimate is 24 kilowatt-hours per barrel. “As a result, citizens lose their quality of life so that oil can be produced.”

This deterioration is particularly notable in Zulia state, Venezuela’s so-called oil cradle, where production has risen to between 350,000 and 370,000 barrels per day of light and medium crude — far below the historic peak of 1.5 million bpd in 2004, but a figure that, for its residents, has translated into daily blackouts exceeding 12 hours.

From the Isla Dorada residential complex in northern Maracaibo, capital of Zulia, José Javier León tells Truthdig that power failures “have worsened dramatically.” In his area, outages used to last four hours but now exceed seven. 

“In many places there are double rounds, meaning the power goes out in the morning and at night, or at night and then before dawn. All the problems have gotten worse, and we don’t know the real reasons. In the suburb of Cuatricentenario, one of the most working-class areas and where the government had the most electoral support, the cuts are the worst,” he says.

León complains that residents are not alerted when the outages will happen. There is nothing like the electricity rationing schedules of the past, which would at least let them plan better. “In my area, there is no domestic gas, so we have electric stoves. Also, these are apartment buildings, where we have to turn on pumps to get water.” To make matters worse, the temperature in Zulia often reaches 39 degrees Celsius (102 Fahrenheit) because of the humidity.

In the Andes, outages add up to as many as 12 hours a day, and 16 hours in rural or border areas. From La Hechicera, an urban neighborhood in the city of Mérida, Silvana Solano tells Truthdig that the power used to go out for seven to eight hours, once a day, “but for the past two months, it goes out twice a day, the first time for seven hours and the other for around five hours, and we can’t predict the schedule. This also affects phone signals, which keeps us from communicating, making payments, etc.”

Some government institutions, including the Mérida mayor’s office, are open only from 8 a.m. to noon. Solano says she is worried that public schools, which operate until 3 p.m., will also adopt this schedule, in turn affecting parents’ working hours. Throughout September, residents of the towns of Caja Seca (Zulia state) and Nueva Bolivia (Mérida state) blocked the Pan-American Highway to protest the power outages.

To Venezuela’s north, on the famous Margarita Island, Alejandro Pérez tells Truthdig there are areas that have gone seven to eight months without water service. “Here we pay for water trucks, $50 for 10,000 liters of water, sometimes with $60 we get 13,000 liters, but you have to pay in foreign cash or at the parallel rate because the Central Bank of Venezuela exchange rate isn’t accepted here.” The black market or informal exchange rate is worth more, for those with foreign currency, than the official exchange rate.

Unlike other Caribbean islands, Margarita doesn’t have significant natural sources of fresh water. Some 90% of the area’s water comes from the mainland, crossing the sea through underwater pipelines that require gigantic pumping stations.

The contradictory rhetoric and the endless problems we face daily mean that, according to the latest AtlasIntel poll conducted for Bloomberg News, only 10% of Venezuelans believe the country will benefit from the oil pact with the U.S. — data that also aligns with the most recent study by the firm Meganálisis, the same one that after Jan. 3 said 92.2% of Venezuelans loved Trump. Emotions change, social problems persist, and without electricity, no economic improvement will be possible.