The proposal for direct U.S. oversight of Venezuela's oil wealth is drawing sharp criticism, with experts warning the South American nation could be reduced to a modern-day resource colony, echoing the "banana republic" dynamics of a century ago. This potential arrangement also carries significant long-term risks for energy companies already operating in the region.
Last Friday evening, President Donald Trump announced a deal with Venezuela's interim president, Delcy Rodríguez, under which the United States would control more than 65 billion barrels of oil reserves "in partnership with private companies." While specifics remain scarce, the sheer scale and ambition of the plan are striking. A U.S. official indicated that a newly established entity would secure 100-year concessions on 17 oil fields, holding proven reserves second only to Saudi Aramco globally.
However, revitalizing Venezuela's struggling petroleum sector would likely require substantial private investment. Sources indicated late last week that new commercial agreements could be finalized as early as this week. Chevron Corp (NYSE: CVX) and other U.S. energy firms are in discussions to expand their Venezuelan operations, though these talks are separate from direct investment in the country's oil fields. Bloomberg has also reported that Alejandro Betancourt, a controversial Venezuelan oil magnate, has emerged as a key intermediary between Washington and Caracas and is currently in talks with the U.S. Department of Defense.
These developments are prompting analysts and academics to draw parallels with the era of neocolonialism, when the U.S. wielded immense influence over Latin America and its natural resources. That approach, which persisted for much of the 20th century, fueled public resentment, a series of coups, and the erosion of democratic institutions—factors that ultimately led to the expropriation and nationalization of foreign-owned oil assets.
Venezuela's turbulent oil history serves as a cautionary tale. Once dominated by American and European oil companies, the country was among the world's top producers. But during the political upheaval of the early 21st century, assets held by Exxon Mobil Corp (NYSE: XOM) and ConocoPhillips (NYSE: COP) were seized and nationalized. Chevron remained the only U.S. oil major with a partial presence.
A key test for Trump and his allies is whether the agreements reached today can avoid repeating history. The White House did not immediately respond to requests for comment. "If I were an investor in Venezuela right now, I would be asking myself: will a future government tear up these contracts?" said Francisco Rodríguez, a Venezuelan economist and professor at the University of Denver.
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