The Pentagon Now Owns a Piece of Venezuela’s Oil; Venezuelans Wonder What They Get in Return

Eight months ago, American forces hauled Nicolás Maduro out of Venezuela in handcuffs. Last month, the reward for that operation came into view: control of one of the largest untapped oil fortunes on Earth. Today, that pact is in force, signed by Mr. Maduro’s longtime deputy.President Trump announced the oil agreement on August 28, calling it, in a Truth Social post, “THE BIGGEST OIL DEAL IN WORLD HISTORY.” The agreement moved from announcement to paper on Wednesday, September 2, when Energy Secretary Chris Wright signed the pact with Venezuela’s acting president, Delcy Rodriguez, at Miraflores Palace in Caracas. The stake runs for an initial 25-year term.The Pentagon’s Office of Strategic Capital will take a 35 percent stake in a newly created private company holding development rights to 17 Venezuelan oil fields, with the State Department separately guaranteed the right to buy a fifth of the output at cost.Together, the arrangement gives Washington an effective majority claim on a company that will become the world’s second-largest corporate holder of proven oil reserves, trailing only Saudi Aramco. The 65 billion barrels covered by the deal are a slice of Venezuela’s total holdings of roughly 303 billion barrels, the largest in the world.Mr. Rubio and Mr. Hegseth negotiated the agreement directly with Ms. Rodriguez using a Pentagon financing tool that was created for an entirely different purpose. The Office of Strategic Capital was created in 2022 to funnel private capital into U.S. critical-technology industries — chips, minerals, supply chains — as a hedge against China, not to take equity stakes in foreign oil fields. The agreement is the clearest sign yet of how completely Washington’s posture toward Caracas has shifted since American forces captured then-dictator Maduro in January and flew him to the United States to face narcoterrorism and drug trafficking charges, which he denies.The raid and corresponding toppling of Mr. Maduro’s dictatorial reign was justified as a means to help Venezuela strengthen the rule of law and move toward democracy. The installation of Ms. Rodriguez as a placeholder was aimed at preventing domestic chaos amid competing power struggles in a bankrupt nation. Ms. Rodriguez’s cooperation has been nothing if not amenable to U.S. desires. The legislation she signed opening Venezuela’s long-nationalized oil sector to private and foreign investment, reverses a policy dating back to Hugo Chavez’s presidency in the 2000s.According to a former Treasury Department official who worked on sanctions licensing and enforcement, however, in the Trump administration’s attempt to secure America’s energy future, it looks to be underwriting the regime networks it once vowed to dismantle.“There is a risk we end up reinforcing some of the worst features of Chavismo, including opaque financial arrangements with counterparties who themselves have shady pasts,” the senior research analyst for the Center on Economic and Financial Power at the Foundation for the Defense of Democracies, Max Meizlish, tells The New York Sun.The Oil Deal With the War DepartmentThe Pentagon’s operating partner in the oil deal is North American Blue Energy Partners, a private Venezuelan firm led by Alejandro Betancourt. Mr. Betancourt built his fortune under Mr. Chavez and has faced money laundering investigations in Spain and Switzerland, though he has never been charged and denies wrongdoing.Mr. Betancourt was barred from leaving Britain for months this year under a Swiss extradition request, which was ultimately withdrawn after senior American officials pressed Swiss authorities to resolve it. He has pledged $100 billion in new infrastructure investment as part of a structure built on financial instruments known as warrants, which allow the government to convert its stake into shares for a fraction of a cent.The setup itself has raised red flags in some policy circles. “This represents an extraordinary and potentially dangerous convergence of military authority, foreign policy, and commercial interest,” the president and founder of the Global Organization for Security and Intelligence, Johan Obdola, tells the Sun.The Venezuelan-born Mr. Obdola says he supported the operation to capture Mr. Maduro, but now worries that the system around him was never really dismantled.Not everyone reads the arrangement the same way. “There are potential risks associated with this instrument,” a senior non-resident fellow at the Center for Strategic and International Studies, Evan Ellis, tells the Sun. “These include the risk of associating the U.S. government with Venezuelan partners such as Betancourt, who have previously been investigated for corruption and other questionable activities tied to the Nicolás Maduro Chavista regime.”Why Washington Wants the Oil NowWhile Washington may be trading one set of compromised partners in Caracas for another, the timing is tied to domestic politics. Mr. Trump faces pressure over gasoline prices, and the Strategic Petroleum Reserve has fallen below 300 million barrels for the first time in more than four decades. The dispersal is part of the effort to keep precise down as the conflict between the United States and Israel against Iran slows the flow of Gulf oil through the Strait of Hormuz. Oil purchased from the new Venezuelan venture is intended to refill that reserve and support military use, though the heavy oil has been deemed unsuitable for America’s salt cavern depots.The oil deal also may be another tool for a long-term wager with China, whose leader, Xi Jinping, will meet with the president at the White House later this month. Washington had already imposed a naval blockade on sanctioned tankers before Mr. Maduro’s capture, intercepting Chinese-owned vessels in the Caribbean. In the days after, loadings by Venezuela’s state-owned oil company to main customers in China halted almost entirely. At the same time, Chevron’s American-licensed joint venture kept pumping and shipping to the United States without interruption.Venezuela’s petroleum company’s cargoes attempted to assure China, its largest oil customer and creditor, that shipments were secure, even as they sat idle for days at a stretch.A White House spokesperson said oil from the new Venezuelan-American venture could reach U.S. reserves by November. Still, several of its 17 fields need to restart from zero and others require heavy new investment before producing a barrel.Ms. Rodriguez has said Venezuela’s cut works out to roughly $19 per barrel, based on an assumed $65 price. None of the 17 fields went through a public bidding process, a problem that opposition figure Henrique Capriles writes has defined the country’s oil revenue all year. “We need a new government,” he said. The man who ran Venezuela’s state oil company under Hugo Chavez, Rafael Ramirez, likened it to “the greatest plunder of our resources and turning us into a North American colony.”Still, Mr. Rubio has called the agreement a huge win for both nations, and points to nearly $100 billion in expected private investment and thousands of jobs. Independent analysts are skeptical Americans will see any benefit at the pump soon.“This deal will never lower U.S. gasoline prices on any timeframe, because the breakeven costs for new investments in Venezuelan oil are about $80 to $85 per barrel,” the director of the Middle East program at Defense Priorities, Rose Kelanic, tells the Sun. “If global oil prices remain below that mark, the investment will lose money — meaning that U.S. taxpayers will lose money.”Ms. Kelanic also underscores that Pentagon ownership of a foreign country’s oil reserves is without precedent in American history, and that a similar idea floated during the Second World War was quashed by American oil companies that did not want government interference in the industry.Mr. Ellis, for his part, is more persuaded by the signal the deal sends, even if the oil itself takes years to flow.“It sends a strong message to markets that Washington is tied to the future of Delcy’s government, and that the U.S. will have an even stronger stake in the stability of the government, whether or not democratic, and in making sure that the oil flows,” Mr. Ellis says. “That commitment sends a message to major players like Chevron, that emboldens them to proceed with at least some of their own investments.”A Country Still Burying Its DeadThe deal comes two months after twin earthquakes flattened parts of northern Venezuela, with a death toll that has climbed above 6,400 and thousands still unaccounted, according to figures from National Assembly President Jorge Rodriguez. Reconstruction in the hardest-hit state, La Guaira, where some 190 buildings collapsed entirely, is still in its early stages, with tens of thousands of people living in makeshift camps.Some analysts doubt the windfall will reach ordinary Venezuelans. Venezuela currently produces roughly 1.1 million barrels of oil a day, despite holding 17 percent of the world’s proven reserves. Fixing decades of neglected pipelines, refineries, and pumping stations will cost tens of billions of dollars and take years, no matter whose name ends up on the lease.Venezuela’s opposition is split. Nearly all opposition lawmakers in the National Assembly voted this week to approve the deal, including Congressman Antonio Ecarri, who wrote, “Venezuela needs American investment” and must “fully reintegrate our country into the Western Hemisphere.”Asked about Venezuela holding elections, Mr. Trump told reporters last week, “I just don’t think they’re ready yet.” He added that Ms. Rodiguez is “doing a great job.” “We took them out of a dictatorship, and we’re getting along great with the government,” he said.Not every critic is convinced the arrangement serves American interests. A former Venezuelan official who teaches at Harvard’s Kennedy School, Ricardo Hausmann, called the agreement “shameful” and Venezuela’s de facto leader illegitimate. Scolding Mr. Rubio on social media, he said the deal “will come to haunt you.”From Mr. Obdola’s purview, however, earthquake recovery and the oil deal cannot be separated from the broader question of who benefits at home or abroad.“Without contractual transparency, independent auditing, democratic accountability and a protected reconstruction mechanism, new oil revenue may alleviate immediate suffering while simultaneously strengthening the political and economic networks that contributed to Venezuela’s destruction,” Mr. Obdola tells the Sun. For a country whose oil has not managed to prevent repeated blackouts in the country, including on the night of Mr. Trump’s announcement, that risk is the story underneath the story.“We’re building a skyscraper built on pillars of clay,” wrote a prominent opposition figure, Juan Pablo Guanipa.

The Pentagon Now Owns a Piece of Venezuela’s Oil; Venezuelans Wonder What They Get in Return

The Pentagon Now Owns a Piece of Venezuela’s Oil; Venezuelans Wonder What They Get in Return

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