U.S.-Venezuela oil deal involving NABEP raises concerns among potential investors

Caracas, Venezuela. A proposed arrangement granting U.S. access to part of Venezuela’s oil reserves through North American Blue Energy Partners has raised questions among oil companies considering investments in the country, sources familiar with the situation told Reuters.

The deal, involving Venezuelan businessman Alejandro Betancourt, comes as President Donald Trump seeks to encourage major U.S. oil companies to expand production in Venezuela.

Terms of the arrangement

A White House fact sheet released late on Monday said private oil company North American Blue Energy Partners (NABEP) would receive a 100-year lease for 17 Venezuelan oilfields containing about 65 billion barrels of reserves.

Under the arrangement, the United States would take a 35% equity stake in NABEP’s corporate parent, receive a guaranteed 20% of production and hold a right of first refusal to buy all remaining output.

Concerns over company control

NABEP is controlled by Venezuelan businessman Alejandro Betancourt, who has been investigated by U.S. and European authorities over previous dealings with the Venezuelan government but 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,” a person involved in preparations for an event where energy contracts are expected to be signed this week said.

NABEP, which produces about 170,000 barrels per day, did not immediately respond to a request for comment. In an emailed statement after the White House released details of the agreement, Betancourt said the transaction would “unleash that potential to the great benefit of both Venezuelans and Americans.”

The company said Betancourt has worked in Venezuela’s oil industry for more than 15 years and has most recently led NABEP’s production expansion. It said it aims in the near term to raise output to more than 1 million barrels per day.

Investment conditions

The arrangement highlights the challenge facing Trump in persuading major U.S. companies, particularly ExxonMobil and ConocoPhillips, to invest in Venezuela and rapidly increase its oil production.

Both companies left Venezuela in 2007 after the government of former president Hugo Chavez nationalised their assets. They have repeatedly said legal certainty and contract sanctity requirements have not yet been met for them to return.

Trump told reporters on Monday that Exxon was among companies entering Venezuela, without providing details. ExxonMobil declined to comment on the statement.

A ConocoPhillips spokesperson referred to an earlier statement saying any investment decision would depend on several factors, including policy stability and adherence to the rule of law.