Pentagon Plans 35% Stake in Venezuelan Oil Venture as It Seeks 20% of Future Output
Updated
Updated · Yahoo Finance · Aug 30
Pentagon Plans 35% Stake in Venezuelan Oil Venture as It Seeks 20% of Future Output
3 articles · Updated · Yahoo Finance · Aug 30
Summary
The Defense Department plans to take a 35% passive stake in North American Blue Energy Partners through penny warrants, giving Washington direct equity exposure to Venezuelan oil without major upfront spending, the Wall Street Journal reported.
The structure also grants the Pentagon preferential rights to buy 20% of the venture's future oil production at cost, extending the U.S. role from facilitating investment to owning and securing supply.
NABEP, led by Alejandro Betancourt, could develop 17 oil fields and has become Venezuela's second-largest private producer behind Chevron, after U.S. majors stayed wary of legal, security and infrastructure risks.
Senior Pentagon and State Department officials negotiated terms in Venezuela in July, but the deal could leave private U.S. oil companies competing with a federally backed venture.
Venezuela produces about 1.1 million barrels a day, yet analysts say damaged infrastructure could take years to rebuild and future governments could still challenge the agreement.