Venezuelan oil will serve as leverage for Trump against Canada. Paltrinieri speaks out

“The biggest oil deal in world history” – the largest oil deal in history – Donald Trump wrote on social media on Friday evening, presenting the new agreement for over 65 billion barrels from Venezuela, struck with Delcy Rodríguez, acting president and former deputy to the dictator Nicolás Maduro. A “gift from Venezuela”, Trump said, “at no cost to the American taxpayer”. However, the text of the agreement has not yet been published by either party, who in fact do not even agree on its duration: a US official told Bloomberg of a 100-year concession covering 17 oil fields, whilst Delcy Rodríguez stated that it would be valid for 25 years. In any case, on Sunday the U.S. president added that this oil will soon be used to replenish the U.S. Strategic Petroleum Reserve (SPR), which has fallen to critical levels after being used, since the start of the war against Iran, to cushion the impact on oil supply.

According to Andrea Paltrinieri, an energy markets expert and professor at the Catholic University of Milan, Trump’s statements on using Venezuelan oil to replenish strategic reserves “are ridiculous” – he explains to Il Foglio. The caverns – that is, the underground storage facilities dug into salt deposits between Texas and Louisiana – “can only hold light to medium-grade crude by regulation,” comments the analyst. “So they are typically filled with ‘sweet and light’ crude (low in sulphur and low in density, ed.), such as West Texas Intermediate (WTI). They absolutely cannot be mixed with ‘heavy and sour’ grades (dense and sulphur-rich, ed.), such as Venezuelan crude. This would create a mixture of crude that would damage the caverns and be unusable”, as it would fall outside the specifications required by refineries.

Paltrinieri then continues: “The agreement, however, from the US perspective, is certainly significant in the medium to long term. But not because this type of oil will replace the oil passing through the Strait of Hormuz (the medium-grade oil, ed.), but rather because, being heavy and sour, it will be able to replace oil imported from Canada in the medium term”. In fact, American refineries in the Gulf of Mexico are equipped to process heavy, sulphur-rich crude, such as the Canadian crude of which the United States is a major importer. “In my view, this was Trump’s idea,” concludes Paltrinieri, “and he will now be able to use this agreement as leverage in trade negotiations with Ottawa as well.”

In any case, the Venezuelan government and the US Secretary of State, Marco Rubio, have promised around 100 billion in private investment in exchange for the barrels. However, no oil company has yet committed to this. For example, both Chevron and Exxon, when approached by the Associated Press, declined to comment. In any case, still on the subject of promises, over the years Venezuelan state coffers could expect to receive more than 209 billion dollars in revenue from production at 17 oil fields totalling over 1.5 million barrels per day. Delcy Rodríguez claims that the state will receive around 19 dollars per barrel sold, based on a reference price of 65 dollars.

However, Francisco Monaldi, one of the leading experts on Venezuelan oil and a professor at Rice University, explained in a post on X that the figures for Venezuela’s reserves in the Orinoco Belt are inflated. Or rather, the promised 65 billion barrels exist only on paper. That figure, according to Monaldi, is inflated by a reserves assessment carried out during the Chávez era, which assumes an extraction rate of 20 per cent of the oil present underground. Yet in the Orinoco fields, the extraction rate has historically never exceeded 6–8 per cent. Based on realistic assumptions, Monaldi states, the recoverable oil in the blocks covered by the agreement would be a third of the declared amount, i.e. around 20–25 billion barrels. In any case, even if all of it were truly recoverable, at a rate of 1.5 million barrels a day it would take 119 years to extract all 65 billion barrels promised. Furthermore, in terms of fact-checking Donald Trump’s statements, according to Forbes analyst David Blackmon, it would take between 7 and 10 years before the first barrel is produced from some of the 17 fields mentioned, given that not all of them have been developed and made ready for production.