AFTER the US war on Venezuela, in which the US seized Nicolás Maduro and his wife, Cilia Flores de Maduro, and put a pliant Delcy Rodríguez in power, the US struck an oil deal with the new puppet government. The US secured a 35 per cent stake in a new oil company it created—North American Blue Energy Partners (NABEP)—without making any investments. The US’s chosen partner in this deal is Alejandro Betancourt, who will hold the majority shares in this looting of Venezuela’s oil. The captive Venezuelan government has granted NABEP a century-long concession to operate 17 oil fields, about a quarter of the country's oil reserves, the largest of any country in the world: 17.2 per cent of the world’s total. Alejandro Betancourt and his company have now become Venezuela's second-largest private oil producer, after the American giant Chevron. The deal gives NABEP a central position in Venezuela’s oil sector, where the country holds the world’s largest proven crude reserves. The company is already Venezuela's second-largest private oil producer.

Trump called this one-sided deal 'the biggest oil deal in world history', with the US getting more than a third of the company without investing a penny. The deal also grants the US preferential rights to purchase 20 per cent of the company's oil production at cost, not at market value, plus a right of first refusal on the remaining 80 per cent. The US not only holds veto power over all board appointments, but also stipulates that a majority of the company’s board members must be US citizens. This is perhaps the most naked neocolonial deal that we have seen in the post-colonial era.

In this history, we should not lose sight of the fact that Venezuela was an important producer of oil before the US and its allies imposed brutal sanctions during the Chavez government. Chavez had nationalised Venezuela’s oil companies, and in retaliation the US and its Western allies sanctioned all its oil exports. Consequently, Venezuela’s oil exports dropped from about 12 per cent of total exports in the world to less than 1 per cent.

The fall of the Soviet Union and the weakening of the socialist forces during this period took a heavy toll on Latin America, where the US has tried to restore its neocolonial dominance with a reworked Monroe doctrine. Trump explicitly endorsed this in his 2025 National Security Strategy document and continues to cite it as his philosophy of international relations, which analysts term as the “Donroe” doctrine. Fortunately for Latin America, Brazil and Brazilians have narrowly escaped Venezuela's fate. With President Lula’s victory and Bolsonaro's defeat, it has averted a second Venezuela and the capture of Brazil’s huge oil resources.

While the US has secured a significant additional source of oil in Venezuela, there is a problem with Venezuelan crude. The second part of Venezuela’s oil story is how to refine its  ultra-heavy crude oil. While crudes can be converted into usable fuels like petrol and diesel for cars and buses, the cost of refining changes significantly with the nature of the crude. Only a few refineries can deal with Venezuela’s ultra-heavy crude today.

To understand the problem with Venezuela’s crude oil, we need to understand what crude oil is, and what we can get out of it. When after drilling we strike oil, meaning we discover oil, it means that we have discovered a specific one within a large range of liquid hydrocarbons. This ranges from light crude to heavy, viscous crude that approaches an almost semi-solid form. The lighter crudes are more easily processed than heavier crudes. Another complication is sulphur content in the crude oil: if it is low, it is called sweet; if it is high, it is termed sour. Obviously, sweet crude is preferred to sour crude as they are easier to process. On both indices, Venezuelan crude is at the other end of the spectrum: it is heavy, if not ultra-heavy, particularly in the Orinoco basin, which provides the bulk of Venezuela’s crude, and it is also high in sulphur content.

Most refineries do not handle such crudes, leaving it to refineries that have invested capital to handle a variety of crude. To handle heavy and sour crudes, refineries must have additional equipment and a longer cascade of such equipment to sequentially process the crude. The advantage of processing such crude oils is that due to their conversion complexity, they are heavily discounted and therefore available at much lower prices. Further, the materials recovered from processing heavy oil can also be sold in the market. The flip side is that it significantly increases the plant's capital cost.

Earlier, Venezuelan crude was refined at US Gulf Coast refineries. With Venezuela under sanctions during and after the Chavez years, these refineries shifted to other feedstocks. With the discovery of shale oil that produces sweet, easy-to-process light oil, most US refineries no longer have the capacity to handle Venezuelan crude, at least not at costs that would allow decent margins. This is where Reliance enters the picture.

Reliance's Jamnagar refinery has a Nelson complexity rating of 21, meaning it can handle a wide range of crudes. Its complexity rating is one of the highest in the world, and it is also the world’s largest refinery. But that is not the only reason that the US Secretary of State Marco Rubio visited Jamnagar. Reliance has also promised to invest in Brownsville, Texas, in a 168,000-barrel-per-day refinery, the first to be built in the US in 50 years.

This brings us to the larger issues of oil and its geostrategic importance. The US-Iran war, followed by the Ansarallah-Houthi war with Saudi Arabia, has significantly weakened the US control over West Asia’s oil. Yes, the US itself is a significant producer of oil and gas. But that is not enough. As hydrocarbons—oil and gas—are central to the global economy, it also wants to use global oil flows to control global politics. The significance of the Israeli-US attack on Iran and the coup in Venezuela lies here.

The US wants to control global oil flows to shape the global political economy. In West Asia, its attempt to destroy Iran as a centre of resistance has not only failed but significantly weakened its position in the region. In Venezuela, it has won, for now, a significant victory and controls its oil with a pliant Delcy Rodríguez in charge there. An arrangement to process Venezuela’s oil in India would serve two goals: first, to put Venezuela’s oil on the market with the US controlling the sale proceeds; and second, to tie the biggest player in India’s economy to the US.

In this context, the optics of US Secretary of State Rubio landing in Mumbai for his visit to Jamnagar, and the US Ambassador to India saying the US expected Jaishankar, the External Affairs Minister, to meet him there, are bad optics for India. This follows US Labour Secretary Keith Sonderling's move to prevent eight companies, including Indian IT majors such as Infosys, Tata Consultancy Services, Wipro, HCL, and others, from seeking green cards for their expatriate Indian staff. The Trump administration’s foreign policy is built on the central premise of bullying what it believes are weaker countries.

Like all bullies, bending before it only increases the bullying. The US as a bully, only understands the logic of power. By allowing the US to deal directly with Ambani, India weakens its geostrategic leverage, since Indian refineries can process a variety of crude, and any negotiations must first be held with the Indian government before the various oil majors are involved. If Rubio is negotiating on behalf of the Venezuelan oil company which owns the crude, the negotiations here should be held with the External Affairs Minister before approaching the target companies.

International politics is about geostrategic advantage and mutual give-and-take. The US under Trump wants to return to the “good old days” when a handful of colonial and settler-colonial powers ruled the world: a time of all take and no give for them. India needs to assert that those days are long gone. The US cannot impose penalties on countries like India for buying Russian crude, not because the US itself is also buying Russian oil, but because India has a sovereign right over who it trades with and how it does so. And giving in to bullies only leads to more bullying.