Does Donald Trump want control of Venezuela’s oil?

Hello and welcome to Energy Source, coming to you today from Bogotá and New York, where energy executives, government officials and civil society groups are gathering for Climate Week.

The annual event, which is held alongside the UN General Assembly, showcases efforts to accelerate climate action and discusses challenges facing the world’s transition away from fossil fuels.

One of the biggest obstacles to climate action is President Donald Trump, who has pulled the US out of the Paris climate accord, promoted fossil fuels and targeted clean energy by slashing tax breaks and withdrawing permits.

Attendees were able to celebrate an important victory on Monday when a judge issued an injunction blocking a “stop work” order issued by the White House against an offshore wind farm on the US east coast. The decision means Danish developer Ørsted can restart work, at least for the moment.

Despite Trump’s assault on billions of dollars of fully permitted green energy projects, many US executives have refrained from criticising the government over concerns they could be targeted by a president who has made no secret of his willingness to go after his enemies.

But one attendee at Climate Week, Andrew Forrest, founder and executive chair of Fortescue, one of the world’s biggest mining companies, did not shy away from criticising Washington during an interview with Energy Source. He attacked the administration’s “short-sighted” assault on clean energy and zealous promotion of fossil fuels, which he claimed would hurt Americans.

“What I see is the American people being denied access to all horses in the race as a population, as an economy . . . [A] I see that as uncompetitive. B, it’ll hold back the technology growth of a country. C, it will hold back abundant, low-cost energy coming to your citizens.”

Forrest contrasted the Trump administration’s fossil fuel-driven approach to that of China, a strategic competitor of the US that has built an “extremely competitive renewable energy industry”.

“The difference with renewable energy is that its build, baby, build. It’s jobs in construction, it’s jobs in manufacturing, it’s jobs in technology. Oil and gas . . . it’s just drilling for a very expensive resource, and that is already a very mature industry . . . It’s a flatlining, declining industry so I would say categorically, those countries who are encouraging other forms of energy are doing the right thing by their citizens.”

Forrest, who made his fortune digging iron ore out of Australia’s Pilbara region and shipping it to China, has undergone a Pauline conversion on climate change over the past decade. In 2022 he unveiled plans to invest $6bn to eliminate fossil fuels from its mining operations and touted a strategy to build the miner into a green energy powerhouse.

Forrest has scaled back Fortescue’s ambitions over the past 18 months, in part because of a slower than anticipated market for green hydrogen, rising costs and Washington’s shift away from green energy. Last year, Fortescue slashed hundreds of jobs from its green energy division and in July it scrapped hydrogen projects in the US and Australia.

But Forrest, who brought Fortescue’s ammonia-powered vessel Green Pioneer to New York for Climate Week, said he remains convinced green energy will thrive.

“It’s clear as day that the green industry is rapidly becoming cheaper than the fossil fuels industry,” he said. “So we are here to demonstrate that the tide has turned. Here you have an administration that is vehemently against the world shipping industry going green, which to me smacks of the most unusual short sightedness that I’ve seen in the political and business sector for some time.”

For our main item today we travel to South America where my FT colleague Joe Daniels looks at how the US is ratcheting up pressure on Venezuela — a nation with the world’s largest oil reserves.

Thanks for reading, Jamie

What US military strikes mean for Venezuela’s oil

As a US naval flotilla takes out alleged drug traffickers in the southern Caribbean, Venezuela’s revolutionary socialist President Nicolás Maduro has said the Trump administration is after his removal — and control of his country’s vast oil reserves.

“Everyone knows what they’re saying about drug trafficking is a lie,” Maduro said last week. “Everyone knows the real truth, which is that they want regime change, and why is that? So they can install a puppet government to take control of Venezuela’s oil.”

Venezuela, a founding member of Opec, boasts the world’s largest proven oil reserves, and at the turn of the century produced about 3mn barrels a day. 

But corruption, mismanagement and expropriations that began under Maduro’s late predecessor Hugo Chávez — and compounded by sanctions on state-owned Petróleos de Venezuela SA (PDVSA) levied by the first Trump administration — caused output to plummet to about 500,000 barrels a day in 2020.

Chevron, which has been in Venezuela for more than a century and has joint ventures with PDVSA, is central to the second Trump administration’s zigzagging policy towards Maduro, who was sworn in for a third term in January following an election widely regarded as a sham.

The US Treasury in July granted Chevron a sanctions exemption licence to operate and export crude from Venezuela, following limited deals between Washington and Caracas on migration, two months after its earlier licence expired.

That reprieve has seen Venezuela’s national production hold steady at about 920,000 b/d, with Chevron pumping about 250,000 b/d. Much of the rest is exported to China via intermediaries and a dark fleet of tankers to evade sanctions. Analysts expect the US company’s return to spark a correction in the price of heavy crude.

Unlike licences granted during Joe Biden’s administration, the terms of the current waiver are private, though the US state department has said Chevron will not pay taxes or royalties to Maduro’s government. Licences previously granted to non-US producers, including Maurel & Prom, Repsol, and Eni, were allowed to expire without replacement.

The country’s democratic opposition described the earlier licences as a “lifeline” for Maduro’s cash-strapped regime.

But alongside the concessions to Chevron, the White House appears to be using gunboat diplomacy to apply pressure on Maduro.

The US has built up a significant military presence in the southern Caribbean, deploying eight warships — including three guided-missile destroyers, an amphibious assault squadron, a guided-missile cruiser and a nuclear-powered fast-attack submarine — and thousands of troops. Washington has also ordered 10 F-35 jets — the world’s most advanced — to Puerto Rico.

Secretary of state Marco Rubio has described Maduro as the “fugitive” leader of the Cartel de los Soles — a drug trafficking organisation allegedly run by members of Venezuela’s political and military elite — and in August, the Department of Justice doubled the reward for information leading to Maduro’s arrest to $50mn.

Schreiner Parker, partner and head of emerging markets at Rystad Energy, said: “I think the long-term strategy that the Trump administration is employing here is to say we need to have some American company with its foot in the door so that if and when this changes, we can be in a position to lead or at least be a part of the renaissance of production.”

“If you can get Maduro out and you can get western oil companies back into Venezuela, then Venezuela could become a supply counterbalance to Saudi Arabia in the mid to late 2030s.”

The US naval build-up has not moved the needle on exports to China, which are “flowing normally”, according to Francisco Monaldi, a Latin America energy expert at Rice University. Monaldi added “things could change” if the US seized an oil tanker “with some excuse like sanctions evasion, drug smuggling, or money laundering by the Cartel de los Soles”.

The White House said: “The US government will continue to seek to deprive the Maduro regime of profit from the sale of oil.”

One potential loser amid the current tensions is Cuba, which has long relied on fuel exports from Venezuela to fire its power plants in return for political counsel and intelligence.

Iván Freites, who heads a Venezuelan oil and gas workers union from exile in Miami, said neither of the two tankers used to ship fuel to Cuba have loaded in Venezuela this month, amid nationwide blackouts on the Communist-run island. (Joe Daniels in Bogotá, Colombia)

Power Points

The Trump administration is pushing the World Bank to fund more fossil fuel projects, including drilling for new gas.

The Democratic Republic of Congo, the world’s biggest producer of cobalt, is ending a seven-month ban on exports and instead introducing a quota system, a move expected to trigger a further rise in the price of a metal that is key to the production of electric vehicles.

Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Kristina Shevory, Tom Wilson, Rachel Millard and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.