Chevron and Eni Sign Venezuela Expansion Deals as Washington Takes Control of a Fifth of Reserves

Venezuela and a group of foreign energy companies signed drilling and development agreements in Caracas on Tuesday, completing the commercial part of an arrangement that transfers operating control of a large part of the country's oil industry to firms aligned with Washington. Chevron, Italy's Eni, and the power equipment maker GE Vernova signed the agreements in the presence of Delcy Rodríguez, Venezuela's acting president, and Chris Wright, the United States energy secretary, according to Al Jazeera.

Chevron said its deal covers two additional fields in the Orinoco Belt, is worth about $7 billion, and will more than double the project's output within five years. Eni obtained exclusive exploration rights to Junin 5, one of the larger undeveloped blocks in the same belt. Both deals follow the framework agreement announced days earlier, which Euronews reported gives companies linked to the United States majority control over 17 fields holding roughly a fifth of Venezuela's oil reserves. Under that framework, American citizens must hold a majority of seats on the operating company's board, and the United States government holds a veto over board membership.

The two sides describe the arrangement in very different terms. United States officials rejected the accusation that Washington coerced Venezuela into the deal, saying it benefits both countries and develops oil reserves that had remained undeveloped underground. Nicolás Maduro, the Venezuelan president removed from office and now held in the United States, has called himself a prisoner of war and described his capture as a kidnapping. His lawyers asked a federal court in Manhattan to dismiss the drug trafficking indictment that formed the legal basis for the operation that removed him.

The timing affects the oil market. Brent crude traded near $95 a barrel this week, as tanker traffic through the Strait of Hormuz remains severely constrained. Venezuelan heavy crude cannot replace Gulf barrels quickly, because the fields need years of capital spending and refinery matching, but the agreement changes where the marginal barrel of oil is expected to come from later this decade. It also shows that physical control of reserves, not price alone, has become the tool states use to secure supply.