Washington's deal to "control" 65bn barrels of Venezuela's heavy crude won't do much to drag the country out of its financial morass. Venezuela is stuck in a Catch-22. Its future depends on increasing oil production from the current 1mn barrels a day. But most majors are keeping their distance, partly because they hold big unpaid bills and expropriation claims.

Luring them back requires rapid restructuring of Venezuela's $200bn-plus debt. Enter Alejandro Betancourt, an oligarch running a private producer. He has agreed to sell to the US, at cost, a fifth of his company's production. Bondholders have been marginally cheered, on the basis that the US provides a ready buyer for Venezuelan crude.

But there is far less to the deal than meets the eye. Interim leader Delcy Rodríguez has touted $209bn in fiscal revenue over 25 years, implying an average of 1.2mn barrels per day. This requires putting a lot of trust in Betancourt, whose company is currently producing only 200,000 barrels. By comparison, Chevron is targeting an increase of 300,000 barrels in five years.

Van Eck estimates Venezuela will require $140bn of investment to double output to 2mn barrels a day, or $210bn to reach 3mn. Such creative solutions as production-linked warrants will only help at the margin.