“President Trump spent months declaring his ouster of Venezuela's leader had secured the country's oil for the U.S. When U.S. energy companies resisted investing at the speed and scale he wanted, his administration devised an extraordinary solution.
The agreement announced Friday evening would transform the U.S. government from a broker of U.S. oil investments in Venezuela to an investor itself.
It would give Washington a direct financial stake in a private company that would be granted centurylong rights to some of the world's largest proven oil reserves -- and tie the U.S. more closely to an unelected government.
The private company, led by controversial Venezuelan businessman Alejandro Betancourt, would have the opportunity to develop 17 oil fields said to contain 65 billion barrels of oil, or one-fifth of the country's reserves.
The Pentagon, in a striking expansion of its remit, would help finance the oil venture and reap the rewards of its future output.
"If this deal can survive subsequent Venezuelan governments, then Trump will have secured strategic oil reserves for the U.S. that go beyond the shale revolution," said Schreiner Parker, a partner at consulting firm Rystad Energy. "Now, there's a lot of uncertainty as to how these barrels go from reserves to actual production, and who's going to invest the time, effort and money to do that."
The deal caps months of secretive negotiations and frequent trips to Caracas by U.S. officials and negotiators. Trump and interim Venezuelan President Delcy Rodriguez agreed to the outlines of the deal on a phone call days before the announcement, people familiar with the talks said.
Officials then spent recent days working through details on how to implement the unusual agreement.
Trump announced the deal on social media Friday night.
Although it was negotiated by senior officials in both governments, the structure would make the U.S. an investor in a private company rather than a direct counterparty to the Venezuelan government.
The U.S. plans to take a 35% passive stake in Betancourt's North American Blue Energy Partners and would secure preferential rights to purchase 20% of its production at cost, people involved in negotiating the agreement said.
The Pentagon's Office of Strategic Capital plans to structure the investment through penny warrants [1] that would yield the U.S. an equity ownership in the business without a significant capital investment, the people said.
The Pentagon office has limited statutory authority to strike deals designed to support U.S. national-security interests, typically through loans and guarantees.
Betancourt has served as a broker in Venezuela's energy deals and has close ties to Rodriguez. He faced criminal investigations of alleged money laundering in Spain and Switzerland, though no formal charges have emerged.
His NABEP has become the second-largest private oil producer in Venezuela, after Chevron, over the past two years.
Secretary of State Marco Rubio said the agreement would secure low-cost oil in the Western Hemisphere and lower gas prices for Americans.
Rodriguez underscored that it would bring more than $100 billion in investment, more than $209 billion in taxes, and thousands of jobs.
Yet the deal angered many Venezuelans and sowed confusion among some oil executives, and even U.S. officials, over what was agreed upon and how it would work.
For U.S. oil companies pursuing potential investments in Venezuela, the idea of competing with a U.S.-backed private company with a stake in swaths of the country's oil fields is daunting, people close to the companies said.
U.S. officials said the state-backed company would be the second-largest corporate holder of proven reserves after Saudi Aramco.
"Why is the U.S. subsidizing and building a major competitor to the U.S. oil patch?" said Ed Hirs, an energy economist at the University of Houston. "Lucy [of the Peanuts comic strip] will pull out the football once again -- once Trump is out of office."
The deal is also raising alarms in the industry about whether a new Venezuelan government could mount a successful legal challenge, and whether it might undercut new entrants' confidence in making investments, the people said.
The substance of the agreement appears to be in direct conflict with Venezuela's 1999 constitution, which states that the country's oil reserves belong to the Bolivarian Republic of Venezuela and can't be sold.
Critics say Venezuela's current government, populated by unelected officials kept in power by the Trump administration, has no legal authority to sell the country's oil rights.
Faced with an unpopular and grinding war with Iran, which has squeezed global energy supplies, the Trump administration felt a sense of urgency to announce it had secured a long-term source of crude in the Western Hemisphere, people involved in the talks said. Trump also sought a political win in portraying the Venezuela deal as a way to insulate Americans from the costs of the turmoil in the Middle East ahead of November elections, they added.
Venezuela, though, isn't currently a major oil producer -- it pumps just 1.1 million barrels a day, on par with North Dakota. Restoring production would take years and is unlikely to quickly spur the drop in gas prices that Trump has promised, some oil analysts said.
Trump officials turned to Betancourt because they felt he was positioned to implement the venture: His company is already operating in the country, and he has close relationships with senior Venezuelan officials, people familiar with the negotiations said.
The Trump administration tried to push major oil companies including ExxonMobil and ConocoPhillips to return to Venezuela's oil fields and quickly reopen the spigot.
But after months of sluggish negotiations, much of the U.S. oil industry has remained on the sidelines. Many companies are reluctant to invest in the country's dilapidated oil infrastructure because of security and legal issues.
A delegation of senior Pentagon and State Department officials, including OSC Director David Lorch, visited Venezuela in July to hammer out the deal's terms, some of the people said.
The OSC launched in 2022 with a mandate to support industries considered critical to U.S. national security, though loans only started flowing from the office during the second Trump administration.
The private company structure was deliberately intended to bind future Venezuelan governments to the agreement and make it difficult to unwind, one of the people involved said.” [2]
1. A penny warrant is a financial option that gives the holder the right to buy a company's stock at a very small price, usually just one penny ($0.01) or less per share.
How It Works
• Strike Price: The exercise price (the cost to buy the stock) is nominal, meaning it is set close to zero.
• Paid Upfront: Companies often bundle penny warrants with larger debt or equity deals. The real cost of the shares is treated as funded through that main transaction. [1]
• Deal Sweetener: Startups or venture capitalists use these warrants to make an investment deal more attractive. If the company grows and succeeds, the investor makes a big profit because they get extra shares for almost no money.
Why Companies Use Penny Warrants
• Rewarding Investors: They give early backers an extra bonus or "kicker" for taking a risk.
• Bridging Valuation Gaps: They help fix price mismatches when a startup cannot agree on a precise valuation with investors.
• Cashless Exercise: Holders can often exchange or convert the warrant without needing to pay any extra cash out of pocket.
2. Deal for Venezuela's Oil Rights Followed Months of Secret Talks. Bergengruen, Vera; FitzGerald, Drew; Eaton, Collin; Forero, Juan. Wall Street Journal, Eastern edition; New York, N.Y.. 31 Aug 2026: A1.
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