US Company to Control Venezuela Oilfields After Ousting Chinese, Russian Firms
US-Venezuela Oil Agreement and Strategic Implications
By Steve Holland and Jarrett Renshaw
Overview of the Takeover
WASHINGTON, Aug 31 (Reuters) - U.S. oil company North American Blue Energy Partners will take over some oilfields previously controlled by several Chinese companies and a Russian firm, two U.S. officials told Reuters on Monday.
The takeover will be part of a sweeping oil production agreement that President Donald Trump announced with Venezuela, they said.
Details of the Contracts and Ownership
The projects were among 14 contracts newly granted to U.S.-backed North American Blue Energy Partners, according to the officials. NABEP was previously owned by U.S. oil tycoon Harry Sargeant and is now controlled by Venezuelan businessman Alejandro Betancourt.
"Venezuela is blessed with an abundance of natural resources, hardworking people and untapped potential,” Betancourt said in a statement, confirming the deal. “This transaction will unleash that potential to the great benefit of both Venezuelans and Americans."
US Government Involvement and Rights
NABEP said it will have operating control of the business and the U.S. government will have holding rights to a 35% stake in the company, alongside "preferential access" to 20% of the company’s production at cost.
The White House said NABEP has also granted the U.S. Department of State the right of first refusal to purchase the remaining 80% of its production.
Strategic Benefits for the US
Last week, Trump announced that the U.S. had secured access to some 64 billion barrels of Venezuela's proven oil reserves through a partnership with private business.
The arrangement gives U.S. companies a foothold in some of Venezuela's strategically important oil assets while displacing Chinese and Russian interests that have long played a major role in the country's energy sector. It also gives Washington a direct role in determining who produces and sells Venezuela's oil, as the Trump administration seeks to reshape the country's oil industry and bring its vast reserves closer to U.S. economic and geopolitical interests.
Board Control and Project Expansion
The U.S. will also have veto power over NABEP's board and directors and has stipulated that a majority of the board must be American citizens, the White House added.
NABEP is expected to control a total of 17 projects in Venezuela that it plans to develop and ultimately use to supply oil to the U.S. Fourteen of those projects will be newly granted by the Venezuelan government, the officials said.
Displacement of Chinese and Russian Firms
Five of the 14 fields have been operated by Chinese companies under a model promoted by then-President Nicolas Maduro, while one was previously operated by a Russian company, the officials said.
Two of the projects have been operated by China Concord Resources, which was sanctioned by the U.S. in 2019 for Iran-related activity. Another project was operated by Sinopec and another by China National Petroleum Corp, the officials said.
"Not only are we opening up new opportunities for the U.S. government to benefit and for U.S. operators to benefit, we are opening up the United States as the market for this oil which was previously being sent to China," the official said.
Other Previous Operators
Two other projects were operated by affiliates of Alex Saab, a former close associate of ousted Venezuelan President Nicolas Maduro who is currently being held in U.S. custody, the officials said.
Another oilfield was linked to a nephew of Maduro's wife, Cilia Flores, the officials said.
Economic and Political Impact
Trump told reporters earlier on Monday that the U.S. was taking out "millions and millions of barrels of oil" that is currently being shipped to refineries in Texas and Louisiana, among other locations. He is to meet oil and gas retailers and refineries on Tuesday.
Venezuelan Political Transition and Legal Considerations
The officials said talks between Venezuela's interim authorities and representatives of the 2015 National Assembly are aimed at restoring a measure of constitutional order and addressing legal questions surrounding the country's transition.
The Trump administration views the 2015 assembly as the last Venezuelan legislative body elected and operating under the country's constitution, although it has no formal governing power.
One official said reaching an agreement with the 2015 assembly could provide a constitutional and legal basis for the broader transition, including economic decisions such as the revival of Venezuela's oil industry.
(Reporting by Steve Holland and Jarrett Renshaw; Additonal reporting by Marianna Parraga; Editing by David Gregorio)
