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“A major oil agreement has been announced between the government of the United States and the [Venezuelan interim] regime of Delcy Rodriquez. I know what you [Venezuelans] are feeling, sadness, anger and that painful sense so familiar throughout our history that someone else is making decisions about what belongs to us in our name, without us. The true scope of this agreement is still unknown. Who is signing it? What exactly is being signed? Who is providing the funds? Who is offering the guarantees? How does this benefit Venezuelans? Quite rightly, this has sparked deep concern about its implications for our country's future.”
That was part of a statement to the Venezuelan people released last Thursday by María Corina Machado, a Venezuelan politician, activist, and prominent leader of the opposition to Venezuela’s interim-President Delcy Rodriguez. These were Machado’s first extended remarks about what President Trump has called “the biggest oil deal in world history.”
But as Machado so accurately observed, “We still do not know the true scope of this agreement,” nor, I will add, does anyone know if this deal will ever go into effect.
First, a bit of history, since I believe the Trump administration initial plan was described publicly back on January 9, when the President met with executives of 17 oil companies at the White House.
At that time, with Venezuelan President Nicolas Maduro locked in a New York City jail, President Trump said, “American companies will have the opportunity to rebuild Venezuela's rotting energy infrastructure and eventually increase oil production to levels never ever seen before.”
“Our giant oil companies,” Trump said, “will be spending at least $100 billion of their money, not the government's money. They don't need government money, but they need government protection and need government security that when they spend all this money, it's going to be there.”
He added, “Venezuela [meaning interim-President Delcy Rodriguez] has also agreed that the United States will immediately begin refining and selling up to 50 million barrels of Venezuelan crude oil, which will continue indefinitely.”
Trump then made his pitch saying, “All of the companies here today are going to be treasured partners in bringing the nation of Venezuela back to life, restoring its economy and generating…tremendous wealth for the companies that are going in.”
At that session, Mark Nelson, vice chairman of Chevron, when called upon said, “For more than a century, Chevron has been a part of Venezuela's past. We are certainly committed to its present. And we very much look forward, as a proud American company, to help it build a better future.”
However, when Trump asked ExxonMobile Chairman and Chief Executive Officer Darren Woods to “say a few words,” the response was different.
Woods explained, “We have a very long history in Venezuela. In fact, we first got into Venezuela back in the 1940s. We've had our assets seized there twice. And so you can imagine to re-enter a third time would require some pretty significant changes from what we've historically seen here and what is currently the state.”
Apparently, over the past seven months more negotiations took place and on August 28, Trump announced on TruthSocial, “THE BIGGEST OIL DEAL IN WORLD HISTORY! At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority U.S. control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer.”
Three days later, on August 31, the White House released a fact sheet with more details.
The fact sheet disclosed the Venezuelan interim government [Interim-President Delcy Rodriguez] has granted a privately-held oil company, North American Blue Energy Partners (NABEP), 100-year concessions for 17 oil fields with proven reserves of approximately 65 billion barrels.
I should point out that Venezuela has some 303 billion barrels of proven oil reserves, the largest in the world, with Saudi Arabia second with 287 billion barrels. On the other hand, as of this year, the U.S, has only some 46 billion barrels of proven reserves, although this country is one of the world’s largest oil producers.
NABEP, based in Barbados, already was Venezuela’s second-largest private oil producer run by Leopoldo Alejandro Betancourt López. According to press reports, the 46-year-old Betancourt has a checkered background, but nonetheless was used by the Trump team in planning the U.S operation that seized former-President Nicolas Maduro, and afterwards served as a liaison figure with Delcy Rodriguez.
The White House fact sheet also said, “At no cost to the American taxpayer, NABEP has granted the Department of War’s Office of Strategic Capital (OSC) a 35% equity stake in its corporate parent, representing up to hundreds of billions in value and dividends for the United States.”
The OSC, started under the Biden administration, has up-to-now funded private companies developing certain needed military technologies. The Trump administration last year increased its legislative authority to support up to $200 billion in loans and loan guarantees, and recently has grown its staff to near 100 people.
But the OSC has never been prepared to deal with the role apparently to be required if, as the agreement apparently states, it would be a major stockholder in what could be one of the largest oil companies in the world.
Perhaps because of the proposed Venezuela deal, the OSC announced on August 17, it was going to establish “a panel of pre-qualified law firms (“Firms”) to act as its external transaction counsel.” The selected firms would then represent borrowers or others doing business with the OSC on a “Sponsor Pay Basis,” meaning that the legal fees and expenses of OSC for a transaction will be borne solely by the borrower or another third party and not by OSC, or any U.S. government entity.
An additional benefit from the deal to the U.S., according to the fact sheet is: “NABEP has also granted the U.S. State Department the right to purchase, at production cost, a guaranteed 20% of the off-take [contracted oil purchased] from all current and future fields NABEP will operate.” The State Department was also given “the right of first refusal to purchase the remaining 80% of its [NABEP’s] production,” according to the fact sheet.
It’s unclear why the State Department has this role other than Secretary Rubio was a negotiator of this deal and the State Department was named on Trump’s January 15, Executive Order to administer funds from current Venezuela oil sales being controlled at that time by the U.S.
As for NABEP -- the company itself -- the U.S. government was given “veto power over the appointment of any member of the board of directors,” plus “a majority of NABEP’s board of directors must be U.S. citizens,” the fact sheet said. Additional, according to the fact sheet, “the U.S. government’s agreement with NABEP is governed by U.S. law and is subject to the jurisdiction of U.S. courts.”
Naturally, questions about whether this agreement ever goes through have been raised.
On September 1, The Atlantic Council pointed out that the Pentagon’s OSC “has never been leveraged for a program like this or the management of such a vast equity stake in a foreign country’s national assets (assets which that country’s own constitution forbids the sale of).”
The Atlantic Council further said, “As in Venezuela, it is entirely plausible that future U.S. governments may likewise look askance at this agreement -- particularly if…it is not resulting in the massive oil production increases that are presently hoped for.”
For example, interim-President Rodriguez said during an August 29 television interview that the agreement could generate about $209 billion in revenue for Venezuela, based on a $65 per barrel oil price where some $19 per barrel would flow directly to Venezuela, to boost government revenue.
But others have questioned whether the Venezuelan government would actually get $19 per barrel if the U.S. exercised its right to buy 20 percent of production at cost.
Then there is the political opposition in Venezuela where leaders such as Machado have argued, “The wealth beneath our soil does not belong to an illegitimate regime. It belongs to the Venezuelan people.”
Machado added, “Venezuelans know there can be no development without strong institutions and a government elected by popular vote. That is the only real guarantee of success and stability for any large-scale investment.”
Last Wednesday, both Trump and Rodríguez brushed off questions about when the next Venezuelan election might be held.
Trump told reporters, “You had a very powerful, very nasty dictatorship in Venezuela – and they’re [the Venezuelan electorate] just not going to be ready for it yet, but soon.” With Energy Secretary Chris Wright, who was visiting Caracas, Rodríguez told reporters, “I have worked tirelessly to ensure that Venezuela is ready and prepared when the time comes for its electoral process.”
Elliott Abrams, who served as U.S. special envoy to Venezuela during Trump’s first term, has told the New York Times, “If an election is to take place in Venezuela, a nine-month runway for preparation is likely to be expected. Within the time period, Abrams said, “Here’s my fear: It makes us [the U.S.] Delcy’s partner, and gives the President a reason to want her to remain in power,” because she will do “whatever Trump tells her to do.”
Luis A. Pacheco, for 17 years an executive at Venezuela’s national oil company PDVSA and currently a nonresident fellow at Rice University’s Baker Institute for Public Policy, wrote last week in Americas Quarterly, “Little is known about how this deal will proceed, so important questions still need answers.”
Pacheco’s questions included, “Will NABEP sign this deal with PDVSA, the state oil company, making it more like a standard joint venture?...It’s still unclear whether NABEP can turn around and share ownership with the U.S. government, specifically with the Pentagon’s special unit originally designated as a counterpart to this pact. Beyond this critical aspect, there is also the question of NABEP’s financial and technical muscle. Will a firm that lacks these credentials be able to outsource to established oil companies to fulfill the contract’s scope?”
With experts raising such questions who can believe this “BIGGEST OIL DEAL IN WORLD HISTORY!” is going forward as currently planned?
For example, back during his January 9 press conference with oil company leaders at the White House, Trump announced that Venezuela had already given the U.S. 30 million barrels of what had been previously-sanctioned oil that it had on hand.
“That's about $4 billion worth,” Trump announced back in January, adding, “And it's on our way to the United States right now. And we want to thank Venezuela for that. And we're working very well with them, obviously, or they wouldn't have been so generous.”
There has been no accounting that I know of for that first gift of $4 billion worth of Venezuelan oil.
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