The administration says oil bought through the arrangement with NABEP will help rebuild the Strategic Petroleum Reserve and also be available for defense and other sensitive needs. A U.S. official told reporters on Tuesday that Washington does not plan to tap its right of first refusal for the other 80% of NABEP's barrels at this time, describing that right as long-term insurance for an emergency. The same official cast the move as primarily strategic, calling it a chance to lock down fields that had "largely been under the influence of Chinese and Russian companies."
Energy Secretary Chris Wright, speaking with CNBC's Brian Sullivan in Caracas on Wednesday, said the point is to boost confidence so private capital will eventually step in. He emphasized the deal is "not a displacement or a replacement of private companies" and that the U.S. government will "not be the operator or producer" of Venezuela's reserves.
Before the deal surfaced, the Pentagon said the Office of Strategic Capital does not take equity in private firms. As Pentagon spokesperson Sean Parnell put it to CNBC on Aug. 28, "Under its statutory authority, OSC's role is strictly limited to providing capital assistance in the form of a loan, loan guarantee, or technical assistance." On Monday, the White House said OSC will receive a 35% ownership interest in NABEP. A U.S. official later told reporters on Tuesday that "the equity position is structured consistent with the statutory authority granted to the Office of Strategic Capital."
That has not quieted skeptics. Peter Harrell - previously an international economics adviser on President Joe Biden's National Security Council - said the administration has yet to articulate the legal basis for pursuing these equity arrangements. Political risk looms as well: Rapidan Energy's Bob McNally said a Democratic win in 2028 would at least trigger a review and possibly an end to the arrangement, while a Republican successor could see a future Venezuelan government tear up the contract. His takeaway: Washington wants to de-risk long-term private investment, but politics in both capitals will keep a lid on the plan's impact.
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U.S. majors have been cautious on Venezuela since the government seized industry assets in 2007. ExxonMobil CEO Darren Woods told Donald Trump in a televised White House session in January that Venezuela is "uninvestable." ConocoPhillips CEO Ryan Lance signaled in February the company does not plan to return until it recovers what Caracas owes it. Chevron is the outlier. It is the only U.S. supermajor still operating in the country and, in a separate move this week, said it plans to invest $7 billion with the aim of more than doubling its Venezuelan output by 2031. As trade expert Scott Lincicome put it, the new vehicle exists because private money has not been interested, and he is skeptical that capital will now rush in.
The administration says it chose NABEP in part because of its chief executive. A U.S. official called the CEO a "good oil operator" who "in the past has been helpful to the United States government." The official acknowledged past allegations of money laundering and corruption against the executive, noting he has denied wrongdoing and "is not facing any charges in the U.S. for violation of its laws." "I'm not nominating anyone for sainthood here," the official said, while arguing the CEO is a proven operator who can restore output and generate the revenue Venezuela needs after roughly two decades in a hole.
NABEP says it lifted its Venezuela production from 18,000 barrels a day to more than 200,000 barrels a day, making it the country's second-largest private producer by its own account. The company projects nearly $100 billion of investment tied to this deal and has a near-term target to push output above 1 million barrels a day.
If this holds, there is a path to more barrels tied to U.S. interests and a modest cushion for government stockpiles. But the structure is unusual, the legal footing is being questioned, and the politics are jumpy on both sides of the Caribbean. Between Chevron's separate $7 billion plan and NABEP's million-barrel ambition, production could climb, yet the durability of those gains depends on court-proof paperwork and election outcomes. For anyone watching fuel prices or companies with Venezuela exposure, expect a moving target rather than a straight line.
