The Venezuela–US Oil Agreement in Detail

An analysis of investment, concession regimes, revenue and political variables.

By Misión Verdad – Aug 31, 2026

The governments of Venezuela and the United States have announced a “historic agreement” in the oil sector, granting favorable concessions to US companies in 17 oil fields.

Donald Trump and his Secretary of State, Marco Rubio, touted the partnership as “the largest oil deal in world history.”

Meanwhile, on the evening of August 29, President Delcy Rodríguez referred to the alliance as a milestone that will mark the country’s “economic rebirth.”

The magnitude and significance of this event warrants a detailed analysis based on the information provided by the Venezuelan president.

Scope and reserves
According to Rodríguez, the treaty will be for 25 years, which contradicts claims made in some media outlets and social media accounts about a supposed duration of 100 years.

The contract includes the positioning of US companies in eight oil blocks, encompassing 17 fields. The total reserves in these areas reach 65 billion barrels of oil.

However, the president has indicated that there is an achievable production target of 1.5 million barrels per day (bpd) in the newly granted fields. It is clear that this goal will not be reached from day one of the agreement. In fact, the transaction will take months to produce its first barrels, and the cumulative production target of 1.5 million bpd could take years.

This suggests that, during the agreement’s duration, as outlined by the president, the target for recoverable crude oil production will be approximately 11 billion barrels. This highlights a significant distinction between the 65 billion barrels announced by Trump and the practical reality of the agreement.

The US president may be resorting to his usual maximalist pronouncements, especially considering that he is in the final stretch of his country’s midterm elections, precisely when a crisis in fuel prices and oil reserve inventories is unfolding due to the crisis his administration has unleashed in the Strait of Hormuz.

These factors underscore the urgent need to differentiate between the president’s rhetoric and the practical and credible dimensions of this important agreement.

Investment, production and profits
The transaction promises a US $100 billion investment for its development. A significant aspect of this announcement is the substantial contribution it would make to the Venezuelan economy as a whole, by providing fresh income through new investment.

The annual influx of billions of dollars in direct investment in oil fields could significantly impact the Venezuelan exchange rate system, which would have repercussions on exchange rate stability and inflation.

The Venezuelan government has indicated that it expects to collect “at least” some US $209 billion in tax revenue during the implementation of the agreement, a figure calculated based on a price of 65 dollars per barrel on the international market.

The president has stated that Venezuela expects to collect at least US $19 for each barrel extracted and sold. Approximately 11 billion barrels, with a floor price of US $19, effectively represents the stated figure.

However, the details of the revenue base are clarified by examining certain aspects of the concessionary regime that applies to this agreement.

Concession regime
As the president indicated, and as stated in the reformed Organic Hydrocarbons Law (LOH), Venezuelan reserves are non-transferable and remain the property of the nation. Therefore, it is necessary to distinguish between exploitation rights and ownership of the subsoil reserves.

The estimated profit per barrel extracted and sold from the 17 fields will be US $19, though this may vary depending on the international price of oil, currently estimated at US $65 per barrel.

These revenues are justified by the royalty regime established for the agreement, as indicated in the LOH. In the case of the concessioned fields, a 32% income tax (ISLR) applies, along with at least 16% royalties.

Why “at least” 16% royalties? This is explained by the LOH. For the development of green fields, a minimum royalty margin of that amount is established, but each deposit and each field is unique. They all have different levels of geological complexity. This suggests that the more complex the field, the lower the royalty—up to 16%. The less complex the field, the higher the royalties, potentially reaching 20% or 25%.

The royalty margin is a percentage, which suggests that, in a scenario of oil prices of US $70, $80, or $85 per barrel, Venezuela would receive royalties. It would generate more profit per barrel extracted from the 17 fields included in the agreement, which could significantly exceed the announced US $209 billion target.

It is necessary to pause at this point to draw a comparison with the most recent tax regimes applicable to new developments—upstream investment—in Venezuela.

Until this year, the Venezuelan concession regime was governed by the Hydrocarbons Law (LOH) created in 2001 and amended in 2006. Technically, the current LOH is an amendment to the same 2001 law, but there are significant variations regarding the concession regime for undeveloped fields. Under the 2000s law, the tax regime was 32% income tax and 30% royalties; however, this was strictly applied to all developments.

The weakness of that law was that it applied to mature fields, offering substantial benefits, but it created serious limitations for investment in undeveloped fields. Investing in oil fields is extremely expensive, technically complex, and in many cases, a company can invest in exploration and production processes that could take years before extracting its first barrels.

Continuing with the comparison, in the 1990s, with the so-called “oil opening,” a completely different system existed. For oil fields, a 32% income tax regime was created, along with a mere 1% royalty. In reality, there were tax incentives and royalty payments of 1% that were negligible, at a time when a barrel of oil cost $15, $20, or even $25. Furthermore, the heavy and extra-heavy crude oils from the Orinoco Oil Belt, sold as bitumen, were priced at coal rates. Companies were essentially getting the crude for free.

This distinction is key to the margins of the current system. Speaking of upstream investment and the development of green fields of unconventional crude oil—such as the heavy and extra-heavy crude oils of the Orinoco Belt—the regime of the 17 fields granted to the United States in 2026 is less advantageous for the state than that established in the Hydrocarbons Laws of the 2000s. However, it is clearly much more advantageous than the regime of the “oil opening” of the 1990s.

This element is inherent to national sovereignty and the advantageous allocation of natural resources. Beyond the obvious mathematical balance, the important point to appreciate in this case is that the agreements are coherent and relevant to Venezuela’s investment needs.

Continuing with comparative terms, new oil developments involving large investments and subject to significant technical complexity are being approved worldwide. Looking at the continent, there are notable cases in Colombia, Argentina, Canada, and the United States, countries that, like Venezuela, are developing investments in unconventional crude oil based on porous rock (shale oil) and heavy crude.

If we compare the concession regime between Venezuela and the United States announced recently with the contractual terms in those countries, Venezuela obtains similar advantages in terms of taxes, royalties, and government take (state revenue from resource ownership or rent). That said, Venezuelan revenues from the 17 fields to be granted are within the international standard for profits applied to upstream investment in new unconventional crude oil developments.

The US government is not granting a concession by allowing its companies to pay within the standard 16% royalty and 32% income tax rate. In reality, it is governed by a technical reality. Although Venezuelan heavy and extra-heavy crude is very dense and complex to extract, the investment costs for each barrel remain manageable and can be comparatively much lower than those of other fields in the United States or Argentina.

Unconventional crudes, such as those from the Orinoco Belt, require significant advantages and incentives for the very costly initial investment stages, which include moderate royalties and taxes. The agreement between Venezuela and the United States is neither exceptional nor particularly lucrative for either party. It falls squarely within the norm for upstream investment and new developments of unconventional crudes worldwide.

Some political and geopolitical variables
Politically, there is a crucial first element to consider. The Venezuelan government has demonstrated the political and institutional capacity to manage and negotiate an agreement of this magnitude and to find significant advantages in a partnership preceded by asymmetric coercion. Negotiating with the United States is never easy, especially in the Venezuelan context after January 3rd.

The pact announced by [Acting] President Rodríguez is, from the Venezuelan perspective, clearly practical, viable, and advantageous. This is possible thanks to two objective realities: The United States needs oil with a long-term perspective, and the current Venezuelan government is in control of the country’s dynamics; it is the one that demonstrated operational resilience despite constant pressure from sanctions during 12 years. In other words, it was time to negotiate.

Secondly, this transaction blurs the cardinal points drawn in the speeches of both sides. The United States has exerted asymmetric coercion on Venezuela, while the Venezuelan government has employed strategic adaptation to navigate the context. However, between these two perspectives lies the practical congruence and convergence that has always governed relations between Washington and Caracas: the oil sector. This is the terrain of real partnerships and the point where ideological imperatives and slogans dissolve to give way to realpolitik in its purest form.

Thirdly, the treaty represents one of those rare moments in politics when the benefit to one does not necessarily come at the expense of the other. The data released by the president irrefutably makes it clear that both sides win.

Venezuela, which has always recognized the United States as a destination market and a major customer of Venezuelan oil, is re-establishing, under new conditions, the parameters of a relationship that should never have been broken due to illegal sanctions.

In the geopolitical sphere, this agreement suggests a significant rethinking of the Venezuelan energy context and also of the needs of the United States.

From a purely rhetorical perspective, negotiating with Chavismo has not been an ideal situation for either Trump or Rubio. But the explanations for this lie not in Caracas but in the Strait of Hormuz. The US military adventure in Iran has distorted security conditions in the maritime passage, in the Red Sea, and throughout Western Asia, and has changed the political architecture upon which the US military power balance has been built. The result is fatal: the region of the major oil basins is not, and will not be, exactly the same as it was before last February.

The United States’ oil reserves are nearing collapse, and fuel prices are offering no respite to the population and the economy.

Regardless of whether the current crisis subsides, the structural conditions of the United States’ relationship with West Asia have fractured. That region is no longer the safe haven for new investments it once was.

In other words, geopolitical conditions remain aligned for Venezuela to regain its position as a relevant energy player. But this is not an easy path; the country will have to grapple with the challenge of consolidating the variable geometry that has governed its model of international relations in order to mitigate the new risks of high exposure to and dependence on the US market.