(Bloomberg) – The U.S. plans to use its newfound assertion of control over billions of barrels of Venezuelan crude oil to refill the nation’s depleted emergency reserve, President Donald Trump said Sunday.
Map source: Global Energy Infrastructure
“One of the things I am going to do with the Venezuelan Oil is fill up the Strategic National Reserves,” Trump said in a Truth Social post, in which he blamed Joe Biden, his predecessor as president, for emptying the reserve.
“The ‘topping out’ process will begin very shortly, and is a Gift from Venezuela to the People of the United States,” Trump said.
The more than 700 MMbbl Strategic Petroleum Reserve currently holds 289.7 MMbbls of oil, or roughly 40% of its capacity, following massive drawdowns by both Trump and Biden.
Trump said Friday that the U.S. was taking control of 65 Bbbls of Venezuela’s proven reserves in partnership with private businesses. U.S. officials said the plan would create the world’s second-largest private oil company by reserves and secure American petroleum supplies for decades to come.
The U.S. will control 55% of the effective output from the joint venture and will obtain the oil at cost, according to a U.S. official.
It’s unclear how quickly Venezuelan production can grow amid degraded existing infrastructure, unreliable electricity and legacy environmental liabilities.
Companies including Chevron Corp. are in talks to expand operations in Venezuela, Bloomberg previously reported, and Eni SpA has said it’s working with Venezuelan authorities to help revive production as well.
Trump hasn’t provided more details on how the arrangement might work and the U.S. Energy Department didn’t immediately respond to a request for comment.
Analysts have said the high-sulfur sour crude produced in Venezuela’s Orinoco Belt region makes it logistically challenging to be pumped into the underground salt domes that comprise the U.S. reserve.
The Energy Department in January denied a report it was considering a plan to deliver Venezuelan crude to U.S. refineries in exchange for U.S. crude to refill the reserve, saying it was “not currently considering” the concept.
The U.S. has struggled to refill its massive reserve created in the aftermath of the Arab oil embargo in the 1970s, in part of because Congress has been reluctant to provide the required billions of dollars in funding.
The massive reserve sits at its lowest level in more than four decades, as the U.S. follows through with a plan to release 172 MMbbl from the oil cache in conjunction with other nations announced in March after the start of the Iran war.
Biden’s administration withdrew hundreds of million of barrels as well through a series of releases including including after Russia’s invasion of Ukraine.
