President Donald Trump’s administration recently engineered a landmark deal granting the Pentagon a substantial ownership stake in North American Blue Energy Partners (NABEP), a private oil company operating in Venezuela. NABEP has secured concessions for 17 oil fields in Venezuela, encompassing an estimated 65 billion barrels of proven reserves. This volume would position NABEP as the second-largest oil company in the world by reserves, trailing only Saudi Aramco and significantly surpassing ExxonMobil. In a move without historical precedent, the U.S. government obtained a 35% equity stake in NABEP at no cost to taxpayers, representing a significant direct involvement in foreign oil production.

The deal grants the U.S. government extensive control over Venezuela’s oil output. The State Department can purchase 20% of NABEP’s production at production cost, and holds the right of first refusal on the remaining 80% of output. Additionally, the U.S. has veto powers over board appointments and requires a majority of board members to be U.S. citizens, effectively making NABEP a state-owned enterprise under U.S. jurisdiction. Energy Secretary Chris Wright emphasized that the government will not operate the oil fields directly but intends to use the arrangement to secure energy supplies for the Strategic Petroleum Reserve and military needs while leveraging geopolitical influence.

Major U.S. oil companies have largely refrained from investing in Venezuela following nationalization moves by the Venezuelan government in 2007, leaving a vacuum NABEP fills with government backing. Chevron remains the only U.S. oil major active in the country, recently announcing plans to invest $7 billion to expand production. NABEP’s CEO Alejandro Betancourt, despite his controversial past with past investigations, was considered by U.S. officials as a skilled operator capable of boosting Venezuela’s oil production significantly, with the firm’s near-term target set at over 1 million barrels per day and $100 billion in investments projected for the sector.

Despite its groundbreaking nature, the deal faces legal and political challenges. Critics highlight the lack of clear statutory authority for the Pentagon’s equity stake and express concerns over the involvement of a businessman with a questionable background in a country notorious for corruption. The arrangement’s future is uncertain, potentially vulnerable to shifts in U.S. or Venezuelan administrations. Analysts suggest the deal primarily aims to reduce risks for private investors rather than guarantee immediate private capital inflows, underscoring the persistent geopolitical and economic risks inherent to Venezuelan oil ventures.