President Trump and Secretary of State Marco Rubio deserve a great deal of credit for the Venezuela oil deal. Chevron and Halliburton will enter Venezuela and take partial ownership of oil fields and production. Exxon Mobil, Conoco, and others are on the sidelines waiting to see how it goes.
Under this agreement, oil will be imported into the United States. It’s going to be used to fill up the Strategic Oil Reserves. It will boost the economy, especially in the Gulf Coast states, and enrich our oil and gas companies. It is good for the Venezuelan people, who need the US companies.
One problem is that this has a bit of a socialist structure. It’s always a problem when the government starts taking ownership. However, it is not the concern people think it is.
This isn’t a case of the government wanting to take over an entire energy sector. Instead, they are finding a way to bring the oil companies back to Venezuela to help both Venezuela and the United States. This hasn’t been tried before. Usually, the US just helps the other country and takes nothing for itself, no matter how much they deserve to do just that.
It’s not your ordinary deal. According to a White House fact sheet, these are the terms.
- In connection with this agreement, the Venezuelan interim authorities have granted North American Blue Energy Partners (NABEP), a privately held oil company that is the second-largest private Venezuelan oil producer and a proven operator, 100-year concessions for 17 oil fields with proven reserves of approximately 65 billion barrels.
- At no cost to the American taxpayer, NABEP has granted the U.S. Department of War’s Office of Strategic Capital a 35% equity stake in its corporate parent, representing up to hundreds of billions in value and dividends for the United States.
- NABEP has granted the U.S. Department of State the right to purchase, at production cost, a guaranteed 20% of the off-take from all current and future fields NABEP will operate—ensuring a stable supply of low-cost oil that can facilitate refilling the Strategic Petroleum Reserve (SPR), which Joe Biden depleted to historic lows, and to provide supply for military and other sensitive uses.
- NABEP has also granted the U.S. Department of State the right of first refusal to purchase the remaining 80% of its production, providing a guaranteed source of energy in our hemisphere in emergency situations.
- The U.S. government has veto power over the appointment of any member of the board of directors, and a majority of NABEP’s board of directors must be U.S. citizens. NABEP will have reputable U.S. auditors, lawyers, and advisors and the U.S. government’s agreement with NABEP is governed by U.S. law and is subject to the jurisdiction of U.S. courts.
The Good, Bad, and Ugly
Millions of barrels of new Venezuelan output will be processed through U.S. refineries and pumped with American rigs and infrastructure, supporting billions in investment in the United States and thousands of jobs here at home.
The problem isn’t now. It’s when the Democrats return to power, and Venezuelan communists see weakness. There is also the question of what they will do with the riches. It is also only good until Democrats undo everything the president has done.
However, we have to add that the US is pushing hard for free elections as soon as the moving parts are in place.