Donald Trump's administration released further details of its Venezuela oil deal on Monday, naming North American Blue Energy Partners as its private partner. The administration said in a press release that the Pentagon's Office of Strategic Capital will take a 35 percent equity stake in the company, Venezuela's second-largest private oil producer, The Hill reported. Chevron said on Wednesday that it would expand its operations in Venezuela.
Why did the administration pursue the deal? Trump pushed for a blockbuster move after growing frustrated that private oil companies, including ExxonMobil and ConocoPhillips, were not moving quickly enough to boost production in Venezuela, the Japan Times reported, citing people familiar with the matter. By starting a new venture directly controlled by the U.S., the administration is seeking to give producers more confidence to commit to developing the 17 oil fields involved. Trump has framed the deal, a U.S. stake in 65 billion barrels of Venezuelan oil, as a victory that will lower gasoline prices and replenish depleted crude reserves.
Where will the money come from? The White House has offered no explanation of where the $100 billion in expected investment is supposed to come from, the Japan Times reported. Trump has been explicit that it will not come from taxpayers, yet its private partner is not large enough to put in that kind of money by itself.
What is Chevron doing? The company has been assigned additional acreage in the Orinoco Belt and plans to invest more than $7 billion over five years, aiming to more than double its production to about 600,000 barrels a day, PBS NewsHour reported. Trump again raised the prospect on Monday of other U.S. oil majors returning, though apart from Chevron there is no evidence of that; Exxon Mobil chief executive Darren Woods called Venezuela "uninvestable" in January, and an Exxon spokesman said this week that "nothing has changed."
Who is questioning the deal? Energy experts say it will take years to revive Venezuela's oil industry, and there are questions about whether acting president Delcy Rodríguez has the authority to grant North American Blue Energy Partners 100-year rights over the 17 fields, PBS NewsHour reported. Ian Vásquez of the Cato Institute wrote that Venezuela's constitution requires such arrangements to be approved by the National Assembly, which has not happened. Energy Secretary Chris Wright pushed back at a joint press conference with Rodríguez in Caracas on Wednesday, calling the agreement "a massive win" for the people of both countries.
Figures referenced: Donald Trump. — JudgeMarket.
