The United States has structured its 35% stake in a Venezuelan oil venture to prevent Washington’s holding being diluted as the project raises fresh capital, a US official said.
The Pentagon’s interest in North American Blue Energy Partners (NABEP) was arranged through “penny warrants”, giving the US the right, but not the obligation, to acquire equity at a token price at a later stage.
The mechanism is intended to preserve the American government’s share as NABEP secures the billions of dollars needed to expand production. The official said it would allow the US to retain 35% of the project’s value once it reaches full production, rather than seeing its stake reduced during development.
“The structure gives the United States all the benefits of being an equity holder today while protecting us from dilution while the project is being developed,” the official said.
US stake in Venezuela oil venture includes dividend rights
The warrants also entitle Washington to receive dividends before they are exercised, according to the official, who spoke on condition of anonymity about the agreement announced by President Donald Trump last week.
NABEP, controlled by Venezuelan businessman Alejandro Betancourt, has been granted 100-year rights to 17 oilfields with estimated reserves of 65 billion barrels under the deal between Washington and Caracas.
The Pentagon will also have a separate right of first offer over NABEP’s oil output. The US will be able to buy 20% of production at a price based on the company’s costs, with the remainder available at market prices.
The concessions were awarded without a competitive process, and the arrangement has faced scrutiny because of investigations into Mr Betancourt’s past business dealings by US and European authorities. He has not been charged and has denied wrongdoing.
Venezuela currently produces about 1.1 million to 1.2 million barrels of oil a day, according to the official. US Energy Secretary Chris Wright has said output could more than double within a few years as separate agreements involving companies including Chevron, Eni, ONGC, GeoPark and GE Vernova take effect.
