The U.S. government has entered an agreement that makes the Pentagon an investor in a private company granted exclusive rights to develop 17 oil fields in Venezuela.
It covers an estimated 65 billion barrels, about a fifth of Venezuela’s total proven reserves. PBS News Hour reported it is the first known time in U.S. history that the federal government will become an investor in an overseas oil deal.
The Pentagon’s Office of Strategic Capital will take a 35% equity stake in North American Blue Energy Partners (NABEP), Venezuela’s second-largest private oil producer. President Donald Trump announced the deal on Aug. 28, describing it as the largest oil agreement in history and saying the deal came at “no cost to American taxpayers.” He said oil produced under the agreement would help refill the U.S. Strategic Petroleum Reserve, which fell below 300 million barrels in August, the first time since 1983.
The White House disclosed additional terms through a fact sheet on Aug. 31. The State Department will hold a guaranteed right to purchase 20% of the company’s output at the cost of production, according to the White House disclosure.
The White House said the venture will be governed by U.S. law and subject to the jurisdiction of U.S. courts, with a board composed mostly of U.S. citizens over which the government holds veto power. The fact sheet also said that NABEP has ambitious plans to rapidly scale production by investing up to $100 billion in new oil infrastructure.
The company is led by Alejandro Betancourt, a Venezuelan businessman who was investigated for alleged money laundering in Spain and Switzerland, and by federal prosecutors in Florida. He has not been charged in any of those jurisdictions and has denied any wrongdoing. Betancourt said in a statement that the deal would “unleash that potential to the great benefit of both Venezuelans and Americans.”
Secretary of State Marco Rubio, who signed the agreement alongside Defense Secretary Pete Hegseth, called the deal “a huge win for both the American and Venezuelan people.” In a Spanish-language interview, Rubio said the vast majority of the 17 fields had been “in Chinese and Russian hands” until now and that if the U.S. supports, it would help the company attract the private investment needed to develop the fields.
U.S. officials told Reuters that five of the 14 newly awarded contracts to NABEP have been previously operated by Chinese firms like China Concord Resources, Sinopec and CNPC and one by a Russian operator tied to Roszarubezhneft. These companies did not hold oil on-ground but held stakes in a state-owned Venezuelan company, Petróleos de Venezuela, S.A. This was a model that was promoted by the then-President Nicolás Maduro. Many of the held areas were barely producing.
Venezuela’s acting president, Delcy Rodríguez, defended the agreement, saying it would facilitate investment aimed at recovering and reconstructing the country’s hydrocarbons infrastructure.
Interior Secretary Doug Burgum told Fox News that the shift makes Venezuela “a strategic ally with the largest reserves with no threat of the chokehold” posed by the Strait of Hormuz, arguing the new supply will help offset Middle East disruptions.
Francisco Monaldi, Ph.D., director of the Latin America Energy Program at Rice University’s Baker Institute for Public Policy told PBS News Hour in an interview that it was a very “unorthodox deal” compared to previous deals done in the sector.
Monaldi said the deal could benefit both countries depending on its details, since the U.S. government’s presence could make investors more willing to take on Venezuela’s risks, which he said include an interim government he characterized as “illegitimate” and the country’s poor record of “respecting agreements.”
Monaldi said some of the fields are already in production and can send oil to the United States, but most are completely undeveloped and require massive infrastructure investment that will take years to materialize. He estimated Venezuela may add 200,000 to 300,000 barrels per day next year, while the Strait of Hormuz situation puts about 10% of world oil production in jeopardy, a disruption he said is of a completely different order of magnitude.
The Strategic Petroleum Reserve typically uses light oil, Monaldi noted, while Venezuela mostly produces heavy and extra-heavy crude. For those reasons, he said, the deal will not lead to a reduction in oil or gasoline prices in the short term.
Monaldi called the selection of Betancourt over companies with decades of experience in Venezuela, such as Chevron, probably the most surprising aspect of the deal. He said part of the explanation may be that Trump is eager to get investment moving quickly, while major companies need board approvals and budget adjustments that take time.
The White House says the concession runs 100 years, while Rodríguez said on Venezuelan state television that the project will last 25 years and target production of more than 1.5 million barrels per day. The two governments have described the underlying terms differently and the White House has not released the legal text of the agreement yet.
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