The United States will control Venezuela’s oil sales for an “indefinite” period and will deposit the proceeds from those transactions into accounts controlled by Washington, U.S. Energy Secretary Chris Wright said.
“If we control the flow of oil and the flow of cash that comes from those sales, we have significant leverage,” Wright said at the Goldman Sachs Energy, Clean Tech & Utilities Conference in Miami. “We need that leverage and that control over oil sales to drive the changes that simply must occur in Venezuela.”
His remarks shed further light on the Trump administration’s strategy of using Venezuela’s oil industry and crude exports both as a pressure tool on the country and as a source of revenue that the United States can oversee.
U.S. President Donald Trump announced on Tuesday that Venezuela would supply the United States with up to 50 million barrels of oil, valued at approximately $2.8 billion at current market prices. Trump stated that the cargoes would be sold, with the proceeds benefiting both countries.
Wright said that volume would come from oil stored in Venezuela. He also said the U.S. government plans to deposit the funds from those oil sales into government accounts and use them for the benefit of the Venezuelan people.
Keeping the proceeds in U.S. Treasury accounts would shield them from Venezuela’s creditors, according to a person familiar with the matter. The United States will gradually ease sanctions on the country, according to two government officials.
Trump is pushing U.S. oil companies such as Chevron Corp., ConocoPhillips, and Exxon Mobil Corp. to rebuild Venezuela’s infrastructure and restart production now that the United States has removed former president Nicolás Maduro. The Trump administration has already held talks with several oil companies, according to an official. The president is expected to meet with energy executives at the White House on Friday, according to people familiar with the matter.
Venezuela’s oil sector has suffered years of corruption, underinvestment, and neglect, and production has fallen below 1 million barrels per day. Wright estimated that output could increase by several hundred thousand barrels per day in the short to medium term.
Restoring the industry to its former glory would be a massive undertaking, with an estimated cost of $10 billion per year over the next decade, according to estimates by Francisco Monaldi, director of Latin America energy policy at Rice University’s Baker Institute for Public Policy.
U.S. oil companies have so far said little publicly about their willingness to take on a challenge of that magnitude.
Venezuela holds some of the world’s largest crude oil reserves, but companies will want to ensure there is a stable government in place before making long-term investments. They will also want some degree of confidence that Washington will support their presence in Venezuela even after Trump leaves office.
The Trump administration has already held discussions with several oil companies, according to an official. The president is expected to meet with energy executives at the White House within the next week, people familiar with the matter said.
Secretary of State Marco Rubio could also attend the planned meeting, the sources said.
