Washington takes a 35 percent stake in a 100-year Venezuelan oil lease

Venezuela's National Assembly has approved a treaty that gives North American Blue Energy Partners a 100-year concession on 17 oilfields holding about 65 billion barrels of proven reserves. The White House fact sheet released late on 1 September says the United States will take a 35 percent equity stake in NABEP's parent through the Pentagon's Office of Strategic Capital, receive 20 percent of output at cost after Venezuelan taxes, and hold a right of first refusal on the rest. U.S. citizens must form a majority of the board. Washington holds a veto on appointments.

Assembly president Jorge Rodríguez announced the vote as support for a binational energy treaty. Opposition lawmaker Luis Emilio Rondón said the chamber needed the fine print. Energy Secretary Chris Wright was due in Caracas on 2 September to sign. Chevron is expected the same week to announce an expansion of the operations it already runs in the country. President Donald Trump said Exxon and other large firms were going in. An Exxon spokesman said on 1 September that nothing had changed, after chief executive Darren Woods earlier this year called Venezuela uninvestable.

NABEP is controlled by Alejandro Betancourt, 46. The company now produces about 170,000 barrels a day and says it wants more than a million. The White House says NABEP has sketched up to $100 billion of new infrastructure. U.S. officials on 1 September called Betancourt a proven operator who had been vetted. They also confirmed support for Venezuelan elections after the January removal of Nicolás Maduro.

Betancourt has been investigated in Spain and Switzerland over alleged money laundering and has been accused of a role in older PDVSA corruption cases. He has not been charged. A company document circulated to reporters says no prosecutor has indicted Derwick Associates or its principals and that no court has found a bribe, a rigged tender or an overbill. That is a legal sentence, not a commercial comfort. Several oil companies weighing Venezuela have told Reuters they are wary of sitting in the same field system as a politically favoured concessionaire.

The arithmetic is large. Sixty-five billion barrels is about a fifth of Venezuela's reserves and, on the Atlantic Council's reading of the most expansive claims, more than 7 percent of known global proven oil. Trump said the barrels would help refill the U.S. Strategic Petroleum Reserve as a gift from Venezuela to the American people. Secretary of State Marco Rubio noted that most of the 17 fields had been in Chinese and Russian hands. The White House has framed the package as part of a three-part plan of stabilisation, reconstruction and democratic transition, and as a return to the Monroe Doctrine.

Reuters columnists warned on 2 September that a two-tier market would follow. Chevron and any other firm that buys and sells at world prices would compete against a vehicle that sells a fifth of its oil to Washington at cost and enjoys a century-long lease. That structure can deter the very capital the fields need. It can also lock the United States into a partner whose legal history other majors do not want on a joint-venture board.

Venezuela's constitution says the state owns the subsoil and may contract for its use against a share of production or against tax and royalty. A 100-year lease to a company whose parent is 35 percent owned by the U.S. Department of War's investment office is a new use of that clause. Interim authorities in Caracas needed the Assembly vote to make the paper look like law. They still need drillers, pipes, upgraders and a security settlement that lasts longer than a fact sheet.

Wright's signature and Chevron's announcement will show how much of the plan is already bankable. Exxon's refusal so far shows the other edge. Oil at $96 because of Hormuz makes Venezuelan heavy barrels look useful in Washington. It does not automatically make them financeable in Houston. The next useful number is not the reserve headline. It is how many barrels NABEP actually lifts in the fourth quarter, and whether any major besides Chevron puts a rig on those 17 fields.