Oil was always at the origin of the US plan for Venezuela: Washington wanted to ensure access to Venezuelan crude oil and Caracas needed a multimillion-dollar investment to recover an industry semi-destroyed by Chavismo. The agreement announced these days responds to that logic, but leaves many questions unanswered: will it really help rebuild Venezuela? Under what conditions and who decides those conditions? Is this a Republican electoral scheme? Will it slow down the negotiating process opened in August?
Donald Trump has spoken of 65 billion barrels "for the United States." That figure corresponds to the proven reserves of 17 Venezuelan fields managed by a structure that points to a former Bolíburg businessman recovered in the stage of Chavismo 3.0: apparently, the company that will be in charge will be North American Blue Energy Partners, owned by Alejandro Betancourt. According to the Wall Street Journal, the US will have a passive 35% stake in the company and a preferential right to buy 20% of its production at cost price.
The unusual formula responds to the fact that companies were not entering Venezuela at the rate that Trump wanted. The deterioration of the facilities, the political and legal risks and the memory of the expropriations of the Hugo Chávez era still weigh heavily, according to the Wall Street Journal. So Washington has ended up placing the Government itself within the operation. There is confusion even among oil executives and US officials.
Caracas assures that the agreement will allow more than 100,000 million dollars of investment, but hardly any details have been given about its origin or its final management. The Venezuelan discussion, in any case, is not whether foreign capital should enter. The point is that there are clear rules, legal certainty and transparency; that the investment does not depend on privileged relations with the Government in Caracas. The interest is in who will have access to these reserves and the conditions under which they are developed. And that is linked to the political situation in Venezuela.
THE TRANSITION
Delcy Rodríguez is the one who signed the agreement on the Venezuelan side. The successor to dictator Nicolás Maduro lacks democratic legitimacy. So, although it is possible that a future democratic government will decide to maintain the agreement if it considers that its conditions are reasonable for the country, it is also possible that it will want to review it. The Venezuelan Constitution establishes that hydrocarbon reserves belong to the Republic, and critics of the pact question that the interim president can compromise the rights to these resources for so long, according to the WSJ.
Furthermore, the US will no longer be watching from the outside. According to the Wall Street Journal, the business structure was designed to make it more difficult for a future Venezuelan government to dismantle the agreement. It is obvious that Venezuela's democratic transition has been left out of play. And although this pact does not allow us to conclude that Washington is going to abandon the idea of elections, it does raise what margin a new president would have if he wanted to change it.
Schreiner Parker, of Rystad Energy, put that condition at the center of his assessment to the Wall Street Journal: "If this agreement can survive the following Venezuelan governments," Trump will have secured strategic reserves for the United States. That "if", beyond the internal key for American voters, contains a good part of the story.
International consultant Carmen Beatriz Fernández responds that there is a risk that the US will manage to stabilize and make Venezuela profitable without democratizing it. «You ask me if autocratic stability is possible: and yes, but it is very expensive. Any regime must have a minimum of legitimacy. The cheapest legitimacy is democratic. "The use of force is very expensive, both in economic and reputational terms for the United States."
In the end, if oil production increases, investments arrive and the Venezuelan State obtains sufficient income, the pact can be presented as the beginning of the reconstruction of the industry. If the contracts are difficult to review, if the distribution of benefits raises doubts or if a future Government considers that the country's resources were committed without sufficient legitimacy, the problem will be much bigger than an oil dispute.
