The Pentagon has taken a 35% equity stake in North American Blue Energy Partners (NABEP), a private Barbados-based company granted 100-year concessions to 17 Venezuelan oilfields. The deal hands NABEP control of 65 billion barrels of proved reserves — if accurate, enough to make it the world's second-largest oil company by that measure — but it faces sharp legal and political questions in Washington.
Pentagon gets a stake without precedent
The Pentagon's Office of Strategic Capital now holds a 35% equity stake in NABEP at no cost to U.S. taxpayers, according to deal details the White House released this week. The arrangement gives the U.S. majority control over 65 billion barrels of Venezuela's proven crude reserves, about 20% of the 303 billion barrels the country is thought to hold.
If those figures hold up, NABEP would rank as the second-largest oil company in the world by proved reserves, behind only Saudi Aramco, said Patrick Rutty, director of global intelligence at Enverus — roughly four times the size of ExxonMobil's reserves. Historian Tyler Priest of the University of Iowa said it is difficult to find a precedent for Washington taking a direct ownership stake in an oil company operating fields in a foreign nation. The U.S. considered a similar move in Saudi Arabia during World War II but backed off under industry pressure, and a 1976 congressional push to create a federal oil company narrowly failed, he said.
State Department locks in cut-rate oil
Beyond the equity stake, the State Department can buy 20% of NABEP's output at production cost rather than market price, plus holds right of first refusal on the remaining 80%. Washington can also veto NABEP board appointments, and a majority of the board must be U.S. citizens. According to CNBC: "This is straight up a state-owned enterprise", said Scott Lincicome, a trade law expert at the Cato Institute.
The White House has said the discounted oil will help refill the Strategic Petroleum Reserve and supply military needs. A U.S. official told reporters the government does not expect to exercise its right to the other 80% of output, calling it a long-term insurance policy tied to geopolitics — the deal aims to pull fields that had drawn Chinese and Russian influence back under U.S.-linked control.
Big Oil stays away, legal doubts persist
U.S. oil majors have largely avoided Venezuela since Caracas nationalized industry assets in 2007. ExxonMobil CEO Darren Woods told Trump in January that Venezuela is uninvestable, while ConocoPhillips has said it won't return until it recovers money it is owed. Chevron remains the only U.S. major active there, having separately agreed this week to invest $7 billion to more than double its Venezuelan production by 2031.
NABEP's CEO, Alejandro Betancourt, has faced money-laundering and corruption allegations but has not been charged and denies wrongdoing; he scaled the company's output from 18,000 to more than 200,000 barrels per day, according to NABEP. The deal has also produced conflicting U.S. statements: the Pentagon said in August that its Office of Strategic Capital does not take equity stakes, before the White House confirmed the 35% stake days later. Bob McNally of Rapidan Energy said a Democratic win in the 2028 election would likely see the deal reconsidered or terminated, while a future Venezuelan regime could tear it up regardless of who holds the U.S. presidency.
Source: CNBC
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