Washington’s Venezuelan oil stake may secure short-term access, but federal ownership could create greater political, legal, and geopolitical risks.

The White House announced that it secured a century of American energy dominance following an oil deal with Venezuela. 

Venezuela’s US-backed interim authorities gave the US a 35 percent equity stake in 17 oil fields, which hold about one-fifth of Venezuela’s oil. 

Washington is taking a major gamble by accepting century-long concessions granted during an unresolved political transition. It’s interesting that the Trump administration would favor equity—and not sanctions relief, a loan guarantee, political-risk support, and more private American investment. The deal may actually create more risk than stability. 

Equity may secure America’s position in the short-term—but over time, political legitimacy, credible courts, predictable contracts and property rights will be paramount. Yet the details of the underlying shareholder agreement are not currently public. What happens to the deal if Venezuela actually completes the democratic transition Washington says it wants? 

Venezuela’s Political Transition Creates Legal Risks for US Oil Ownership

Washington says the stake comes “at no cost to the American taxpayer,” because it paid no upfront purchase price. Without seeing the terms, it’s impossible to know if the stake carries future spending obligations. Even if the stake never requires another taxpayer dollar, ownership is still accompanied by political risk. 

Strategically, Washington may be trying to make Venezuelan investment more credible, but the deal doesn’t reconstitute a functioning investment environment out of thin air. If Venezuelans believe the government signing it lacks legitimacy, a century-long arrangement can create the very risk it is supposed to secure against. 

For example, the Venezuelan Constitution treats hydrocarbon reserves as inalienable public assets. Is what we’ve promised actually legal? 

After the next election, details of the arrangement between interim President Delcy Rodriguez and Donald Trump could easily be reassessed, especially if Venezuelan political opinion turns against perceived “American imperialism.”  A new government in Venezuela might want to reconsider concessions negotiated by its predecessor or even pursue a more competitive oil sector built around private capital, different terms, or a different structure.

A future Venezuelan government that views the concessions as imposed rather than earned may be more inclined to seek Chinese or Russian support in order to hedge its position among rival powers. Competition over influence would inject more instability into the region, not less. And we certainly have many examples of coercion backfiring in foreign policy. 

So although Washington is pursuing national security interests, this does not automatically establish a case for government ownership. Securing access to oil, excluding Chinese and Russian interests from fields we deem strategic, and owning part of the company are all different strategic objectives; they should be treated as such. Energy security comes from diversified suppliers, which reduce the leverage any single producer, actor, or government can assert. Investment agreements can achieve these benefits without the risk of ownership. 

US Oil Ownership Could Invite China and Russia Back Into Venezuela

Global energy companies seem to understand that private investment and federal ownership distribute risk differently. Chevron, Italy’s Eni, India’s ONGC, Colombia’s GeoPark, and GE Vernova are all on track to sign their own Venezuelan agreements under the country’s amended hydrocarbons law, with no federal equity attached to any of them. And they offer more legal protections. 

Chevron and Eni (Italy) signed agreements in September with “enhanced fiscal, commercial and legal terms to protect the long-term investments.” 

If a future Venezuelan government challenges Chevron’s contracts, Chevron can litigate, withdraw, etc. If Caracas were to challenge American concessions in the future, however, the United States confronts the dispute as an owner. A state-vs-state conflict carries a lot greater risk than a simple commercial dispute with a private company, and further US interventions become more likely. 

Private Investment Offers an Alternative to Federal Ownership

If Washington is set on an equity stake, then it must explain what the equity stake uniquely provides, conduct public periodic review on whether the conditions justifying federal ownership still exist, and establish clear conditions for a potential eventual divestment. Washington may be trying to lock in a century of strategic certainty—but simply doesn’t know if the political institutions capable of giving that certainty actually exist.

About the Author: Alexandra Stinson

Alexandra Stinson holds master’s degrees in strategy, cybersecurity, and intelligence from Johns Hopkins SAIS and creative writing from the University of Auckland. Her work examines health policy, emerging technology, and innovation through the lens of free markets and individual choice. She was previously an intern at Reason.

The post America Wants Venezuelan Oil, But Do We Need Venezuelan Equity?  appeared first on The National Interest.