An unprecedented deal for the U.S. to gain access to a fifth of Venezuela’s oil reserves – and the central role a Venezuelan businessman will play – is prompting questions and hesitation from some oil companies evaluating potential investments in the country, sources familiar with the situation told Reuters.
A White House fact sheet released late on Monday outlined an arrangement under which private oil firm North American Blue Energy Partners (NABEP) would receive a 100-year lease for 17 oilfields in Venezuela holding some 65 billion barrels of oil reserves. The U.S. will take a 35% equity stake in the corporate parent company, receive a guaranteed 20% of the oil production and hold a right-of-first-refusal to purchase all of the remaining output.
NABEP is controlled by Venezuelan businessman Alejandro Betancourt, who has been the subject of investigations by U.S. and European authorities following past dealings with the Venezuelan government, although he was never charged. He has previously denied allegations against him.
“Oil majors and large foreign companies negotiating contract migrations want to make sure they will not be seated at the same table with Betancourt,” said a person involved in preparations for an event where energy contracts are expected to be signed this week.
NABEP, which produces around 170,000 barrels of oil a day, did not immediately respond to a request for comment for this story. In an emailed company statement after the White House released details of the agreement, Betancourt said that the transaction would “unleash that potential to the great benefit of both Venezuelans and Americans.”
“Mr. Betancourt has been in the Venezuelan oil industry for more than 15 years with a consistent track record of success, most recently at the helm of NABEP, where he rapidly scaled the company’s production,” the company said in the statement, adding it has a near-term goal of increasing production to more than 1 million barrels of oil per day.
Others may be more cautious, illustrating the uphill battle President Donald Trump faces to convince major U.S. oil companies, particularly ExxonMobil (XOM.N), opens new tab and ConocoPhillips (COP.N), opens new tab, to invest in Venezuela and quickly expand the country’s oil production.
Both companies left Venezuela in 2007 after their assets were nationalized by the government of former President Hugo Chavez, and both have repeatedly said that their requirements of legal certainty and contract sanctity have not yet been met to reenter the country.
Trump told reporters on Monday that Exxon was among the companies going into Venezuela, without elaborating.
ExxonMobil declined to comment when asked about Trump’s statement. A ConocoPhillips spokesperson referred to an earlier statement that said any investment decision would be guided by a number of factors, including policy stability and adherence to the rule of law.
