President Donald Trump has boasted that his sweeping oil accord with Venezuela — effectively giving the US control over much of the nation’s crude wealth — is possibly “the greatest deal ever made.” Some US oil executives beg to differ.
Indeed, the arrangement has caused a wave of unease and alarm among industry leaders who worry it short-circuits ongoing commercial talks and cuts them out of some of Venezuela’s most prospective targets.
Those concerns were described to Bloomberg by people familiar with the matter who asked not to be identified in order to speak more candidly. Some acknowledged the difficulty of publicly criticizing the pact, given the president’s obvious enthusiasm for it, eight months after US forces stormed Caracas and captured longtime President Nicolás Maduro in an operation Trump proclaimed a massive opportunity for US oil companies.
Energy company interest in reviving Venezuela’s badly degraded oil industry culminated in a ceremony in Caracas on Wednesday attended by the country’s acting President Delcy Rodríguez, US Energy Secretary Chris Wright and the bosses of energy companies including Chevron Corp., Eni SpA and GE Vernova Inc. who signed investment accords.
But those agreements, months in the making, were overshadowed by the deal that Trump announced on his social media platform last Friday. The US government is taking a 35% stake in North American Blue Energy Partners, a private oil company led by controversial investor Alejandro Betancourt, which has secured 100-year rights to develop 17 Venezuelan oil fields.
The Betancourt arrangement, marshaled by the US State Department and the Pentagon, blindsided many energy companies and leaders, including those already engaged in commercial talks in Venezuela, according to some people familiar with the matter.
The industry’s disquiet underscores a challenge for the Trump administration as it seeks to achieve competing priorities in Venezuela. While the president wanted to rapidly secure business transactions — and new flows of oil and revenue that can help rebuild the nation — some of the major developers best able to boost output of the country’s heavy crude have been moving more cautiously, wary of continued political and economic risk in the wake of Maduro’s capture.
Supporters of Trump’s tie-up say it will help deliver more crude flows right away; to the president’s backers, some of the grumbling has the tinge of criticism from sore losers who were moving too timidly.
Still, with the US taking a 35% stake in NABEP and securing a right to 20% of its production at cost, the Trump administration has created another worry: that it’s effectively supercharging a defacto national oil company that competes with US oil producers, even those with no desire to step foot in Venezuela.
“When the government takes an equity investment in a private company, it has an incentive to try to preserve that investment,” said Kevin Book, managing director at Washington-based ClearView Energy Partners. “The question is whether or not it does so in a way that’s complementary with the rest of the industry — or competitive with it.”
Administration officials have sought to assuage some oil industry concerns, casting the arrangement with NABEP as providing more security for private-sector transactions in Venezuela, said some people familiar with the matter.
They’ve argued that the US-NABEP enterprise isn’t trying to outcompete the private sector. A US official on Tuesday rejected any characterizations of the deal as a barrier to other companies, stressing that it applies to a specific set of fields and that other oil producers remain free to negotiate with the Venezuelan government.
Separately, a White House official pointed to the Chevron and GE Vernova contracts signed this week as evidence that many firms are successfully negotiating deals in Venezuela.
But not every prospective investor is making inroads.
Among them: Bryan Sheffield, a third-generation Texas oil entrepreneur, who was one of almost two dozen executives who sat down in the White House on Jan. 9 as Trump pressed them to invest tens of billions of dollars to rebuild Venezuela’s oil sector.
Although Sheffield praised the US government for connecting him with Venezuelan officials, he said Friday his team hasn’t gained much traction with its plan to develop the country’s unconventional tight-oil deposits.
“My team wants to keep working it, but when you don’t feel loved and you don’t feel wanted and you see that they’re just cutting conventional fields only, I think unconventional guys will just move to the next country,” Sheffield said in an interview.
The administration has also been confronted by industry dismay at the sheer number of fields allocated to NABEP, which leaves fewer available to US independent operators pursuing their own leases. The parcels now under NABEP’s control include targets some other companies coveted, effectively limiting the attractiveness of remaining potential lease bundles still up for grabs.
Industry figures also have lamented the power being accumulated by Betancourt, an entrepreneur with a checkered history in Venezuela who once faced allegations of money laundering and tax fraud in both Europe and the US. Betancourt has denied wrongdoing and was never charged with a crime. NABEP didn’t immediately respond to a request for comment.
US officials have defended their decision to join forces with Betancourt and his company, casting NABEP as a constructive partner and established oil industry player capable of swiftly hiking oil output. NABEP also brought access to very large proven reserves, a US official told reporters Tuesday.
“This deal has been struck with a private company that has the best track record of success of any company operating in Venezuela — a proven operator, who knows how to scale production and can operate there,” the White House said in a news release Wednesday.
The Trump administration has emphasized that some of the oil fields involved in the NABEP transaction were previously controlled by Russian and Chinese firms. The administration is replacing them with an above-board US-led system that will offer great benefits to both the American and Venezuela people, the White House official said.
It’s not clear that’s soothing worries. To some industry figures, it amounts to an expropriation of leases, potentially normalizing a seizure of assets in the very same country where ConocoPhillips, ExxonMobil Holdings Corp. and other companies had their own portfolios taken decades ago.
Wright took pains Wednesday to emphasize the safeguards he said undergird the US-NABEP transaction, which include US veto power over appointments to NABEP’s board of directors and a requirement a majority of its members are US citizens.
The US is “highly confident” in the structure of the deal, he said, predicting it “will bring enormous benefits to the people of Venezuela and to the people of the United States.”