Trump Needs a Win. Enter His Venezuela Oil Deal

SPEAKER_1 (0:02)

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David Gura (0:09)

Liam, you'll excuse the cynicism here, but do you see this as a bet on the next 100 years, or is this more a bet on something tangible happening here in the next eight weeks, leading up to the midterm elections here in the US?

Liam Denning (0:20)

The next 100 hours? In terms of what the US wants here, or what Trump wants, I think you can answer that on two levels. So there is the kind of grand strategy long-term answer, which is that the US can somehow fashion some kind of Western hemisphere like oil fortress, and Venezuela will be very much a part of that. The other answer to that question is that Trump needs a win on what he did in Venezuela. He badly needs to signal that he's noticing people's unease about fuel prices, which are, you know, diesels at a record, gasoline is close to a record. You know, it's very possible that we may enter the midterms with gasoline above $4 a gallon on average for the very first time.

It's clear that this is really weighing on the administration, and that's why I feel like, you know, the holes and the contradictions in this deal to me speak to the need to send a signal and, you know, worry about the execution later.

David Gura (1:30)

I'm David Gura, and this is the Big Take from Bloomberg News. Today on the show, on a day when oil has once again topped $100 a barrel, we talked to Liam Denning, who writes about energy for Bloomberg Opinion, and Patricia Laya, Bloomberg's Andes Bureau chief, about the Trump administration's plan for the US to take a stake in Venezuela's oil reserves.

So late last month, President Trump announced what he's calling the biggest oil deal in world history. Describe that deal in broad strokes, if you would.

Liam Denning (2:01)

Broad strokes is all we've got. Essentially, what the president was announcing was that the US government would be essentially going into some kind of joint venture or taking a stake in North American Blue Energy Partners, a local Venezuelan operator, taking a 35 percent stake apparently. And that venture would develop 17 oil fields in Venezuela, which apparently sit upon 65 billion barrels of reserves, roughly a fifth of the country's touted oil reserves.

And in return, the US seemingly would pay no money for this upfront, and would get 20 percent of any production at cost, and then a right of first refusal on the other 80 percent, which I assume would be, you know, in the event of some kind of major global disruption, the US would be able to, you know, claim that oil.

David Gura (3:01)

How much did this announcement catch you by surprise?

Liam Denning (3:04)

I think the fact that there was an announcement didn't surprise me. It's been clear since, you know, Trump authorized a military operation that removed Nicola Maduro in January, that he sees this as very much facilitating some kind of oil deal. I think what has surprised me was the nature of it. The idea that the US is effectively going to form some kind of quasi-national oil company with, you know, the federal government taking a direct stake. That did surprise me a lot, and I think it surprised a lot of people.

David Gura (3:36)

Patty, I wonder if we could review sort of how we got to where we are, how we got to the place where Delci Rodriguez could make this announcement. This has been a chaotic year in Venezuela, to say the least.

Patricia Laya (3:45)

Right. So as we all know, Maduro was captured by US forces in the early hours of January 3rd, and Delci Rodriguez was his vice president. In fact, she was vice president, finance minister, Bebe Beza president. She had all sort of roles, very important influential roles within the Maduro government. And constitutionally, once the president is gone, of course, she as vice president would take that role. But also, I think the US saw in Delci Rodriguez, a more pragmatic Chavista official, through which they could heavily influence policy, right, over Venezuela.

David Gura (4:22)

And how has that announcement played in Venezuela? What's the reaction been to it?

Patricia Laya (4:25)

So locally, it wasn't received very well. I mean, I think interim president Delci Rodriguez has received criticism from both ends of the political spectrum. On the one end, hardline Chavista supporters see it as her gifting Venezuela's oil or sort of surrendering Venezuela's sovereignty over its oil reserves. On the opposition side, they are quite wary about this deal and about sort of the strengthening relationship between the US and Venezuela's interim government and what that could mean in terms of entrenching Delci Rodriguez in power in the long term and the legitimacy she holds in signing such a long term agreement over Venezuela's oil resources. But Venezuela has really stressed that it would remain or retain sovereignty over these resources on their ground, while the US has framed it differently.