The Trump Administration has long expressed an interest in Venezuela, which boasts the world’s largest proven crude-oil reserves as of 2023—approximately 303 billion barrels, according to the U.S. Energy Information Administration (EIA).
Read More: What’s Happening With the U.S. and Venezuela, Explained
Secretary of State Marco Rubio called the deal a “huge win” for America in a social media post on Friday, saying that it means “lowering gas prices here at home.”
However, it could be a while before the impact of the new deal with Venezuela is directly felt.
“It provides for the development of 17 strategic fields, with a proven potential of 65 billion barrels of oil, more than $100 billion in investment and more than $209 billion in tax revenue for the state,” the statement said. “These investments will contribute not only to the recovery and modernization of our industry, but also to our country’s economic growth, the energy security of our hemisphere and greater stability in international markets.”
The EIA has attributed Venezuela’s long-term production decline largely to “government mismanagement, international sanctions, and the country’s economic crisis,” which contributed to “a lack of investment and maintenance in the energy sector and a deteriorating infrastructure.” The agency found that Venezuela’s total energy production declined by an average of 8.2% annually between 2011 and 2021.
The agreement envisions private operators playing a central role in that effort. Rodríguez’s post explained that the agreement allows Venezuela to increase its oil production “through the participation of private operators,” without further elaboration.
The deal would give the U.S. 55% of the new company’s effective output, “split between equity ownership and guaranteed at-cost off-take,” the official says.
Other key factors also remain unknown—including how the deal will be financed and whether it includes any target dates for achieving various outcomes.
Why gas prices won’t lower immediately
While those fields contain proven reserves, Venezuela does not have the infrastructure in place currently to produce the oil at a rate that would significantly and rapidly affect the wallets of everyday Americans.
Speaking at the White House on Jan. 9, ExxonMobil Chairman and CEO Darren Woods called it “uninvestable,” given his assessment of the “legal and commercial constructs—frameworks—in place today in Venezuela.”
Patrick De Haan, the head of petroleum analysis for GasBuddy/PDI, provides a similar assessment. He tells TIME, “While the hope of lower gas prices sounds promising, it still will take billions of investment to get that oil.”
But it remains unclear where that investment will come from, including whether the private operator will provide the financing and how the project will proceed “at no cost to the American Taxpayer,” as Trump said.
“That may slow down oil companies from wanting to invest in Venezuela,” he explains.
“Drilling and pumping that oil will take a very long time. Changes to fuel prices won’t happen overnight or even in months,” De Haan says, adding that global refining capacity is currently constrained, further limiting the speed at which additional crude supply could affect the market.
“You will need to factor in several quarters and, in quite a few cases, years,” he says. “Therefore, it is a deal whose benefits will be seen mostly in the medium-long term.”
Even without potential legal hurdles from within Venezuela, executing on the promise of the reserves could take years, which means that Americans may be in for a wait before they see the impact at gas stations across the U.S.
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