Many Venezuelans are expressing dismay and concern over a recent agreement that grants the United States control over approximately one-fifth of the nation's oil reserves. This sentiment stems from a deep-seated belief that Venezuela's oil wealth belongs to its people, a notion that has shaped the country's identity for over a century.
The deal, approved by acting President Delcy Rodríguez, could potentially generate billions of dollars for an oil industry and economy that have been severely impacted by years of mismanagement. However, numerous citizens perceive it as a capitulation, with some suggesting it aligns with what they believe was the U.S. objective when President Donald Trump ordered forces to capture then-President Nicolás Maduro earlier in the year.
"It’s not just worrying, it’s outrageous, because we, like a drop in the ocean, have no power to intervene," said Lisandro Castro, an architect in Caracas. "There is genuine collective concern in Venezuela right now about what we are witnessing."
Historical Significance of Oil in Venezuela
The discovery of oil in the 1920s transformed Venezuela from a poor, agrarian society into an urbanized regional power. The oil industry's influence extended beyond the economy, impacting cultural aspects such as the popularization of baseball and attracting European immigrants who contributed to the nation's development.
Historically, Venezuela's government revenues were largely derived from oil exports, leading politicians to use these funds to influence citizens. The country played a role in co-founding OPEC, and by the 1970s, it nationalized the industry, creating the state-owned Petróleos de Venezuela S.A. (PDVSA). PDVSA traditionally subsidized services like low-cost gasoline, scholarships, and healthcare, reinforcing the public's view that oil wealth was their entitlement.
Economic Volatility and Political Shifts
Venezuela's economy has experienced significant volatility tied to global oil prices. Plummeting prices in the 1980s led to an economic crisis and social unrest, including a failed coup attempt by Hugo Chávez. Once elected president in 1998, Chávez used resurgent oil prices to expand social programs, generating substantial revenue for PDVSA between 1999 and 2011. During this period, the government provided housing, appliances, and medical aid, and created well-paid jobs.
Following Chávez's death and the succession of Nicolás Maduro in 2013, the country entered a severe economic crisis. Declining oil prices, corruption, and mismanagement within PDVSA further eroded profits and production. U.S. sanctions, imposed due to concerns over democratic and human rights issues, further crippled the industry and the economy.
This economic turmoil led to widespread food shortages and prompted millions of Venezuelans to emigrate. Despite current market improvements and stocked stores, high inflation makes basic necessities unaffordable for many, with public sector workers earning around $160 per month and average private sector employees earning approximately $237 per month last year.
Skepticism Surrounding the New Oil Deal
Venezuelans had hoped that a change in leadership might ease crippling sanctions and lead to economic improvements. A legal overhaul in February that opened the path to private investment in the oil industry was seen by some as a precursor to larger changes.
"Everything that happened on Jan. 3 was simply a strategy to get where we are today," Castro stated, referring to Trump's policy. "That is, to fully immerse themselves in the country’s energy affairs for their own personal gain and benefit, not for a purpose that would truly benefit us Venezuelans."
The recent agreement involves a joint venture between Venezuela and North American Blue Energy Partners, the second-largest private oil company operating in the country. Under the terms, the joint venture receives 100-year rights over 17 oil fields with an estimated 65 billion barrels of proven reserves, out of Venezuela's total estimated reserves of roughly 300 billion barrels.
Experts suggest that due to the severe degradation of Venezuela's energy infrastructure, it will take years before new investments translate into significantly higher oil production. U.S. Energy Secretary Chris Wright stated that the U.S. mission in Venezuela is "to bring peace, freedom, opportunity and prosperity to the people." Rodríguez defended the agreement, expressing a desire for Venezuela to become an "energy powerhouse."
Residents in oil-producing regions like Cabimas express a mixture of hope and concern. "On the one hand, one feels and thinks that one of the largest oil reserves has been handed over," said Erwin Ayala, an oil company worker. "But if it’s for the good of the country and for future generations, then yes, we agree with that, because what good is having so much oil ... if there’s no machinery, no technology, to extract it?"