Venezuela has spent years trying to revive an oil industry that was once among the most important in the world. Now, with US President Donald Trump promoting a major agreement covering 17 Venezuelan oilfields, the country has another opportunity to increase production and attract foreign investment. But the company expected to deliver the expansion is facing problems that could make the project considerably harder than its political presentation suggests.

North American Blue Energy Partners (NABEP), a relatively little-known company led by Venezuelan businessman Alejandro Betancourt, has promised to increase production from approximately 224,000 barrels per day to more than one million. The agreement covers fields estimated to contain around 64 billion barrels of reserves.

Those figures make the arrangement look enormous. Yet oil workers, contractors and industry specialists have raised concerns about the company’s ability to manage the project. The problems include a shortage of trained personnel, ageing equipment, damaged infrastructure and difficulties with payments to some contractors.

Venezuela needs the investment. But the country has already experienced what happens when production targets are announced without the industrial capacity to support them. The latest agreement will be judged not by the size of its reserve figures but by how much oil can actually be produced and sold.

The Reserve Figures Tell Only Part of the Story

Trump’s description of the agreement as the biggest oil deal in history has drawn attention to the scale of Venezuela’s petroleum resources. However, the 64 billion barrel figure needs to be understood in the context of the country’s production difficulties.

Oil reserves do not automatically translate into commercially available supply. Companies need functioning wells, drilling rigs, pipelines, electricity and processing facilities. They also need experienced workers who can operate and maintain the equipment. When these systems have been neglected for years, restarting production becomes a complicated and expensive exercise.

Francisco Monaldi, director of the Latin America Energy Program at Rice University’s Baker Institute, has estimated that only around 10 billion barrels could realistically be developed during the 25-year period allowed under Venezuelan law. Even that estimate depends on favourable operating conditions.

The difference between the headline reserve figure and the amount that can actually be developed is substantial. It also explains why production growth is likely to take years rather than months.

Venezuela’s oil industry has been weakened by years of underinvestment and declining maintenance. Some fields still have equipment that can be repaired, but others require substantial redevelopment. The problem is particularly visible in the Maracaibo basin, where much of the infrastructure has deteriorated.

Around 80 percent of approximately 4,000 inactive wells in the basin require repairs. The condition of these wells makes it difficult to increase output quickly, even if additional drilling equipment becomes available.

NABEP Has a Difficult Job Ahead

The company has taken control of 17 oilfields, including 14 additional fields from October 1. It says it has invested around $1 billion of its own capital since entering Venezuela’s energy sector in 2024 and intends to increase annual reinvestment by as much as 50 percent.

NABEP has also announced plans to bring in 60 drilling rigs and 70 pieces of heavy machinery. Three drilling rigs were already operating in the Orinoco region, with additional equipment expected to arrive in stages.

These are substantial commitments, but the practical difficulties are not limited to machinery. Six of the newly acquired fields are largely undeveloped areas located far from existing roads and oil infrastructure. Building operations there will require additional spending before any meaningful production can begin.

The company also faces a shortage of technical staff. Venezuela has lost a large number of experienced oil workers over the years, with many leaving the country or moving into other industries. NABEP has been recruiting employees, including former administrative workers from the state-owned oil company, but it still needs specialists capable of handling drilling, repairs and field operations.

The company says it employs around 5,000 people directly and more than 10,000 contractors. Those numbers suggest a sizeable operation, but the availability of experienced technical workers is more important than the total workforce.

Oil production is a specialised business. A drilling rig cannot be operated safely and efficiently simply because it has arrived at a field. Equipment needs to be maintained, wells need to be assessed and workers need to understand local geological conditions. Mistakes can lead to costly delays and safety problems.

Contractor Payments Could Slow the Expansion

Concerns about outstanding payments have added another difficulty. Several workers and people familiar with NABEP’s operations said the company owed money to some business partners. The total amount could not be established.

NABEP has rejected suggestions that its supplier relationships are in serious difficulty. Its spokesperson said the company was expanding its supplier base and moving to a new payment system. The company also said all invoices were being paid and any disruption would be addressed.

Still, payment arrangements matter enormously in an industry that depends on a large network of contractors. Companies supplying equipment, transport, maintenance and technical services need to be paid on time. If payments are delayed, suppliers may become reluctant to extend credit or continue work.

This is particularly important in Venezuela, where access to international finance has been complicated by sanctions, political uncertainty and concerns about the country’s financial institutions.

NABEP’s chairman has also faced scrutiny in connection with US money-laundering investigations involving funds embezzled from state-owned oil company PDVSA. Betancourt has been a target of those investigations but has not been charged with a crime. The history has nevertheless created questions about the company’s ability to secure banking relationships.

NABEP says it has access to foreign banks and has invested substantial amounts in the country. But it has not provided detailed information about its banking arrangements.

For a project of this size, financing is not a secondary concern. The company needs to pay suppliers, acquire equipment and fund repairs long before the additional oil generates enough revenue to support further investment.

The United States Has a Commercial Interest in the Outcome

The agreement has a political dimension that goes beyond the development of Venezuelan oilfields. Under the arrangement, the United States receives a 35 percent stake in NABEP’s corporate parent and the right to purchase 20 percent of its production at cost.

For Washington, the deal could provide greater access to Venezuelan heavy crude. Some American refineries are equipped to process this type of oil, making additional supplies commercially attractive.

The first shipment of one million barrels to Texas offered an early indication of how the arrangement could work. However, explanations about the financial terms of the cargo created confusion. Trump described it as a gift to the United States, while NABEP initially referred to Washington’s right to purchase oil at production cost before later saying the shipment had been supplied without charge to American taxpayers.

The disagreement may appear minor, but it highlights the need for clear commercial arrangements. When a government has an economic stake in a private company and preferential access to its production, the terms should be transparent.

Venezuelan opposition leader Maria Corina Machado has also questioned the lack of transparency surrounding the contract. She said she had not seen the full agreement, although she supported foreign investment in the country’s oil industry.

Her criticism points to a larger concern. Venezuela needs foreign capital, but investors and the public should be able to understand who controls the country’s natural resources and how the financial benefits will be distributed.

A Recovery Will Take Years, Not Months

NABEP says it intends to develop all 17 fields simultaneously. That is an ambitious plan even for established oil companies with access to international financing and experienced technical teams.

The company’s production target is also significant when compared with Venezuela’s current output. National crude production has remained around 1.2 million barrels per day in recent months. Increasing NABEP’s production to more than one million barrels would represent a major expansion of the country’s petroleum industry.

Venezuelan state oil officials have suggested that the target could be reached within six to seven years. That is a more realistic timeframe than the immediate production surge suggested by the political presentation of the agreement, although it still depends on the company securing sufficient funding and equipment.

There are other uncertainties. Oil production can increase at one field while remaining stagnant at another. Transportation and processing facilities may also become bottlenecks if output rises faster than the supporting infrastructure can handle.

The environmental condition of the Maracaibo basin adds another complication. Damaged pipelines and oil leaks have affected local communities, including fishermen who depend on the lake for their livelihoods. A production recovery that ignores these problems could create additional costs and public opposition.

Venezuela’s oil industry needs more than a new investment agreement. It needs a sustained programme of maintenance, technical training, infrastructure development and institutional reform. NABEP may have an opportunity to contribute to that process, but the company must first show that it can meet its existing commitments.

For now, the agreement remains a large promise attached to a difficult industrial recovery. The oil is there. The challenge is finding the money, equipment and people to bring it to market.

(Adapted from Reuters.com)

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