Enough already with the takes: here’s some real math on Venezuela’s oil deal

The numbers are surprisingly favorable to Caracas but rather harder to square with private investment

The Trump administration has announced a deal to give us Venezuela’s oil. We don’t know a lot of details, but we’re already getting some incorrect opposition. For example, Eurasia Group analyst Gregory Brew (the author of an excellent book on Iran), tweeted this:

Gregory Brew@gbrew24

Early agreements between the Gomez government and the Western majors yielded the Venezuelan state less than 20% of oil profits. AD forced through an agreement in 1943 (expanded in 1948) that codified a 50-50 split. Caracas nationalized in the 1970s and realized the full profits

Giovanni Staunovo🛢 @staunovo

Rodriguez said the agreement could generate about $209 billion in revenue for the Venezuelan state, based on a benchmark oil price of $65 per barrel, though she acknowledged crude prices could fluctuate. She said roughly $19 from each barrel produced and sold under the

11:12 AM · Aug 30, 2026 · 13.2K Views

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6 Replies · 20 Reposts · 57 Likes

The problem is already obvious. The 1948 agreement split profits 50-50 between the government and the private companies. The agreement outlined by President Rodríguez gives the Venezuelan government 29% of the gross revenues. ($19 ÷ $65 ≈ 29%.) Not same thing at all; in fact, that’s a great deal for the government. It’s the kind of error that I live in fear of making, so don’t take this is as criticism of Brew, who’s a great scholar.

In other words, it’s not clear that the deal is a bad one for Venezuela. We’d need to dig deeper. Here’s my first pass at doing that. New information could easily invalidate these calculations; I will update them in a new post should that occur.

Here’s what I could cobble together:

• The agreement covers greenfield and brownfield production, not existing production. From the Financial Times, quoting President Rodríguez’s televised address: “The deal included the development of eight greenfield blocks in Venezuela’s Orinoco Oil Belt.” It also includes nine brownfields.

• The brownfields probably produce about 200,000 bpd at present, if this estimate of Blue Energy Partners current output is correct and if Blue Energy Partners currently controls the brownfields. (The New York Times repeated the estimate.)

• Also from her televised address: the “minimum” royalty rate will be 16% of gross revenues, in addition to an income tax of 34%. The word “minimum” implies that the royalties will be on a sliding scale, but she did not provide details. Under current law, the government can raise royalties as high as 20% for greenfield ventures. (The link goes to Cleary-Gottlieb, one of the best law firms in the world for these issues.)

• According to the President of Venezuela, the amount of new production should reach 1.5 million barrels per day.

• The U.S. government (USG) will get a 35% stake in a company called Blue Energy Partners that will manage the fields. According to the Wall Street Journal, the U.S. won’t pay for that stake. Presumably we get a 35% share of the after-tax profits.

• The USG also gets the right to purchase 20% of production at cost.

• The USG provides a (thus vague) investor guarantee.

This is the space between “I read a news report” and “I spent my Sunday trying to see what the numbers say”

Let’s put it all together. Does this deal make sense, and if so, for whom? I expected this to take an hour or two. Six hours later, I’m paywalling the analysis; the data are available in tabular form below.