Foreign Affairs

Pentagon Will Own 35% Of Venezuela Oil Venture, White House Reveals

Jujovar2010 via Wikimedia Commons

The Pentagon will hold a 35% ownership share of a new oil company created through President Donald Trump’s Venezuela agreement, the White House announced Monday evening.

The announcement comes three days after Trump unveiled the agreement without naming the private partner or the terms of the deal. The Pentagon’s Office of Strategic Capital (OSC) will hold the 35% ownership stake in the venture while the State Department will also hold the right to buy 20% of the venture’s output at cost and the right of first refusal on the rest, according to a Monday fact sheet from the White House.

The Trump administration identified the partner in the deal as North American Blue Energy Partners (NABEP) — a Venezuelan-owned firm that is the country’s second-largest oil operator behind Chevron.

NABEP’s owner, Alejandro Betancourt, has faced money laundering investigations in the U.S., Spain, and Switzerland over the past decade tied to Venezuela’s state oil company. Senior Trump administration officials lobbied Swiss prosecutors to resolve a criminal case against him without charges so that he could serve as an intermediary in Caracas, The Washington Post reported on Aug. 27. Betancourt was never charged in the U.S. case but remains under investigation in Europe and has consistently denied wrongdoing.

The Pentagon’s OSC will hold the government’s equity through penny warrants, a structure that gives the United States ownership without a large capital outlay, The Wall Street Journal reported Saturday.

The 17 fields covered by the deal hold roughly 65 billion barrels of proven reserves, about a fifth of Venezuela’s total, according to the White House. Russian and Chinese companies previously controlled many of them before Venezuelan acting President Delcy Rodriguez granted the rights to NABEP.

The White House also said the agreement costs the U.S. nothing and lets the government veto board appointments — with U.S. citizens holding most of the seats.

NABEP agreed to invest up to $100 billion in new oil infrastructure for Venezuela as part of the agreement, and Secretary of State Marco Rubio and Secretary of War Pete Hegseth signed the agreement on behalf of the United States, the White House said.

The two governments have described the terms differently. Venezuela granted the company 100-year concessions, according to the White House. Meanwhile, Rodriguez said on state-owned broadcaster VTV that the project will last 25 years and target production of more than 1.5 million barrels per day, Fox Business reported.

Trump has said that the deal will reduce gas prices and will refill the Strategic Petroleum Reserve, which is below 300 million barrels for the first time in over four decades.

Asked Monday when drivers could expect gas prices to fall, Trump said “it could be a little bit,” according to The Associated Press.

“If it was two years, you know, that’s a short period of time,” Trump continued.

Democratic Rhode Island Sen. Jack Reed, ranking member of the Senate Armed Services Committee, asked the administration to explain what legal authority it relied on and said that the agreement uses taxpayer-backed financing and military assets to prop up a private oil venture.

“President Trump’s effort to turn the U.S. military into an investor in Venezuelan oil is a blatant abuse of power and taxpayer dollars,” Reed said in a statement.

Republican Arkansas Rep. Rick Crawford, chairman of the House Intelligence Committee, said he expects the administration to brief lawmakers on the terms “hopefully sooner rather than later,” according to The Associated Press.

Secretary of Energy Chris Wright is expected to lead a delegation to Caracas in the coming days to advance the agreement, according to ABC News. Wright is also expected to announce a series of additional deals during his visit, Bloomberg reported.