Source: Fortune.com
Summary
Chevron is set to expand operations in Venezuela, according to a U.S. official, following President Trump’s announcement of a deal to develop the country’s oil reserves. Energy Secretary Chris Wright and Chevron officials are expected to visit Venezuela to unveil the investment. The White House confirmed a partnership with North American Blue Energy Partners, which would give the Pentagon a 35% stake. Analysts remain skeptical about the deal’s feasibility and legal standing. The agreement faces questions about the legitimacy of Venezuela’s acting president and potential future reversals.
Our Reading
The numbers tell one story.
Chevron plans to expand in Venezuela, despite the country’s political instability.
The deal includes a 35% Pentagon stake in a private company.
Analysts doubt the deal’s long-term viability and legal foundation.
The White House says it’s working with existing structures to ensure stability.
Author: Evan Null
U.S. official says private operator was vetted ahead of deal
NABEP, owned by Venezuelan businessman Alejandro Betancourt, is the second-largest operator in Venezuela. The deal with the U.S. government would create a new company, where the Pentagon would take a 35% ownership stake, and the State Department would have the right to buy 20% of the oil produced at cost. The U.S. administration sought to defend its decision to partner with Betancourt, who has faced criminal investigations for alleged money laundering in Spain and Switzerland, according to multiple media reports. No formal charges were ever filed. The official said that Betancourt was vetted and the administration found that “no U.S. laws were violated.”
The official described Betancourt as the only viable partner available for the job, saying that “you have to work with the factors that you have in place.” The U.S. government is not investing money in the new company, the official told reporters, but its backing will help the company attract investment to ramp up production. Analysts say that the deal seems certain to face legal challenges and potentially questions of legitimacy.
The Trump administration negotiated the agreement with Delcy Rodríguez, who took power after the January military operation to capture Nicolás Maduro and spirit him to the United States to face federal narcoterrorism and drug trafficking charges. The Venezuelan Constitution states that contracts of this kind with foreign governments must also be approved by the National Assembly, which did not occur.
The official said that agreement is a partnership with North American Blue Energy Partners, a private entity which is headquartered in Barbados and has its primary regional office and operations in Caracas, Venezuela.
The U.S. government is not investing money in the new company, the official told reporters, but its backing will help the company attract investment to ramp up production. Analysts say that the deal seems certain to face legal challenges and potentially questions of legitimacy.
Deal being pitched as a step toward stability, democracy for Venezuelans
The Trump administration wants elections to happen as quickly as feasible, but is aiming to maintain stability as it helps Venezuela transition following decades of autocratic rule, the official said. The official argued that maintaining stability during such transitions “almost invariably requires you to work with elements of the existing structure, even as you are creating a new one.”
The Pentagon’s role in the deal comes through its Office of Strategic Capital, which was created under former President Joe Biden to invest in technology needed for national security. A second U.S. official speaking on condition of anonymity described the Venezuela agreement as “a very standard deal” and said the office has made several similar ones since Trump returned to office.
The Trump administration wants elections to happen as quickly as feasible, but is aiming to maintain stability as it helps Venezuela transition following decades of autocratic rule, the official said. The official argued that maintaining stability during such transitions “almost invariably requires you to work with elements of the existing structure, even as you are creating a new one.”
The Pentagon’s role in the deal comes through its Office of Strategic Capital, which was created under former President Joe Biden to invest in technology needed for national security. A second U.S. official speaking on condition of anonymity described the Venezuela agreement as “a very standard deal” and said the office has made several similar ones since Trump returned to office.
The Trump administration wants elections to happen as quickly as feasible, but is aiming to maintain stability as it helps Venezuela transition following decades of autocratic rule, the official said. The official argued that maintaining stability during such transitions “almost invariably requires you to work with elements of the existing structure, even as you are creating a new one.”
Trump says other companies are readying for business
Trump has had his eyes on Venezuela’s oil since Maduro’s capture, and his aides call it a path away from reliance on oil from the Middle East. Trump has been pressing to get U.S. businesses to restore a presence in the country. President Hugo Chávez completed the nationalization of Venezuela’s oil industry in 2007, leading major players like ExxonMobil and ConocoPhillips to leave Caracas.
Talking to reporters at the White House on Monday, Trump suggested that other oil companies were readying for business in Venezuela. “We have Exxon going in, we have Chevron going in. We have our big oil companies going in,” he said. ExxonMobil did not immediately respond to a request for comment. Trump in January said he was inclined to leave Exxon out of Venezuela after CEO Darren Woods called the country “uninvestable.”
Chevron has been the only major American oil company actively operating in Venezuela since the nationalization. Trump was scheduled to meet with a group of large and small oil refiners on Tuesday to discuss ways to increase America’s capacity to refine oil into gasoline.
The White House has said that increasing the number of refineries and expanding the capacity at existing facilities would eventually reduce prices for consumers. The administration also sees the need for more refineries to process oil from Venezuela.
Chevron has been the only major American oil company actively operating in Venezuela since the nationalization. Trump was scheduled to meet with a group of large and small oil refiners on Tuesday to discuss ways to increase America’s capacity to refine oil into gasoline.
