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The Trump administration’s plan to take a stake in tens of billions of barrels of Venezuelan oil reserves will hinge on a private company called North American Blue Energy Partners, the White House announced Monday, offering more details on the agreement.
Under the deal, the Venezuelan government granted 100-year concessions to NABEP to drill in 17 oil fields, the White House said in a fact sheet released late Monday. Those oil fields contain about 65 billion barrels, roughly one-fifth of Venezuela’s total proven oil reserves.
The U.S. Defense Department will be granted a 35% stake in the company, according to the White House. The State Department will then have the right to buy 20% of NABEP’s output at the cost of production, and it will have the right of first refusal to buy everything else.
Run by Venezuelan executive Alejandro Betancourt, NABEP describes itself as Venezuela’s second-largest private oil producer, pumping more than 200,000 barrels of oil per day.
In a statement confirming the structure of the deal, NABEP said it is aiming to increase daily production in the near-term to over 1 million barrels. (By comparison, the U.S. consumed about 20.6 million barrels of petroleum daily last year, according to government figures.)
“Venezuela is blessed with an abundance of natural resources, hardworking people and untapped potential,” Betancourt said in a statement thanking President Trump and interim Venezuelan President Delcy Rodriguez. “This transaction will unleash that potential to the great benefit of both Venezuelans and Americans.”
Rodriguez said in a speech over the weekend the ultimate goal is to produce more than 1.5 million barrels per day. She described it as a 25-year deal.
The White House said NABEP has “developed an ambitious plan to rapidly scale production by investing up to $100 billion in new oil infrastructure in Venezuela.” It also said the deal will be executed at “no cost to the American taxpayer.”
Mr. Trump has argued the deal will bring more oil to the U.S. market, pushing down energy prices and allowing the government to replenish its Strategic Petroleum Reserve. Since the U.S. military removed former Venezuelan President Nicolás Maduro from power in January, Mr. Trump has sought to ramp up oil production in Venezuela, which claims to have the world’s largest oil reserves but has languished for years due to underinvestment.
“This deal secures our energy dominance for the next century—all at zero cost to the United States,” the White House said.
Rodriguez has celebrated the deal, calling it a “historic agreement” that will bring scores of private investment to Venezuela’s oil industry and draw hundreds of billions in tax revenue. She has said that Venezuela will retain control over its natural resources.
Some oil industry experts are skeptical that the deal will lead to lower prices at the pump any time soon. It could take years — or more than a decade — for new Venezuelan oil production to start reaching the U.S. market and impacting prices, according to analysts.
The country’s energy infrastructure needs to be rebuilt, and Venezuelan oil tends to be “heavy” (or dense) and “sour” (or high in sulfur), making it harder to refine than the light, sweet crude often found in the United States.
The deal has also drawn pushback from both American and Venezuelan political figures. Some Rodriguez opponents have called it an “asset grab” and questioned the legal basis for handing the U.S. government a stake in a large share of the South American country’s oil reserves.
Democratic Sen. Jack Reed of Rhode Island, ranking member of the Senate Armed Services Committee, called the plan to give the Pentagon a stake in the Venezuelan oil venture “a blatant abuse of power and taxpayer dollars.”
“President Trump has been explicit about his desire to extract Venezuela’s oil,” Reed said in a statement. “His administration removed Nicolás Maduro from power, threw its weight behind the unelected leadership that replaced Maduro, and is now attempting to use U.S. military assets and taxpayer-backed financing to boost a private oil venture.”
