What Happens With The US-Venezuela Oil Deal After 2028?
What happens with the U.S.-Venezuela oil deal announced last week after the 2028 presidential election is decided? That’s the question many in the U.S. oil and gas industry — including executives at some of the biggest companies — are asking now, even as the contracts cementing the deal are being signed by both governments.
What happens with the U.S.-Venezuela oil deal announced last week after the 2028 presidential election is decided? That’s the question many in the U.S. oil and gas industry — including executives at some of the biggest companies — are asking now, even as the contracts cementing the deal are being signed by both governments.
In a story published by the Wall Street Journal on September 4, former executive at Houston-based Apache Corporation Shad Frazier captures the key concern:
“No one wants to go down there and take over a mess and then get blamed for the mess,” Frazier says, “The worry is, when you have a change in U.S. administration in two years, what happens then? No one likes to invest into chaos.”
Let’s think about that:
If the winner in 2028 is a Republican named JD Vance or Marco Rubio — the two leading contenders today for the GOP nomination according to polls – then there would be little if any change to the U.S. commitment to the deal. The status quo would continue. That would almost certainly be the case should another contender — say, Florida Gov. Ron DeSantis or Texas Sen. Ted Cruz — emerge from the pack as the Republican nominee.
In that scenario, the U.S. and Venezuelan governments would have four more years to cement this massive deal into place and consolidate gains in needed infrastructure and production that might render the deal too big to cancel by 2032.
But what if the winner in 2028 is a TDS-afflicted Democrat named Gavin Newsom or Kamala Harris? Or what if the party goes all in on its rapidly building internal Marxist revolution and nominates Alexandria Ocasio Cortez or New York City Mayor Zohran Mamdani in two years? Far-left Democrat political figures are now openly promising to blow up the White House ballroom currently under construction once President Donald Trump leaves office for no good reason other than it is Trump’s idea. That is derangement on the grandest possible scale — it’s literally crazy talk.
Of course, the oil deal with Venezuela is also President Trump’s idea.
The Democrat party today bases its entire political philosophy on the single proposition of hating the current sitting President. Does anyone really think a new Democrat president would hesitate to renege on a contractual agreement with another country, cancelling billions of investment dollars made by corporations in the process? If you do believe that I’d advise talking with executives at TC Energy, the operator that had already invested billions of dollars in the Keystone XL Pipeline system by 2021. All that investment was whisked away when Joe Biden and his infamous autopen cancelled that project as a payoff to the climate alarm community which helps fund Democrat campaigns.
I wrote at the time that that senseless act would do tremendous harm to the business community’s faith in the consistent application of the law by the U.S. federal government. How could it not?
Now, that is really the major problem facing cabinet members Rubio, Energy Secretary Chris Wright, and Interior Secretary Doug Burgum in their efforts to steer this deal to success. There is no doubt that the private company being set up to develop these massive oil fields will need to enter into joint operating agreements with major companies to be successful. Yes, the prize in Venezuela is enormous, but these big companies will also need security guarantees from both governments to justify making major investments in these plays.
Take ExxonMobil as an example: That company is the biggest player in both the Permian Basin and the huge offshore Guyana development. Those are both enormous, mature, low-risk production plays which provide big returns on investment. The challenge becomes how to make these new fields competitive with those kinds of major plays so that management teams can justify major investments in them.
The positive side here is that these big major companies all have decades of experience in making risky plays successful in developing countries work all over the world. Few, if any, have ever offered a prize as enormous as the one available in Venezuela.
None of this will be easy, but anyone who thinks it isn’t possible is unfamiliar with the history of the oil and gas industry.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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