The United States did not purchase an oil field.
According to the New York Times, what it is taking is a warrant: the right to purchase shares at a price fixed in advance in a company called North American Blue Energy Partners. NABEP is registered in Barbados. It produces about 200,000 barrels per day, making it Venezuela’s second-largest private producer. It is controlled by the family of Alejandro Betancourt López, whose personal bank accounts have been under investigation by prosecutors in Zurich for more than a decade. He has never been charged with a crime in any jurisdiction, and his company’s general counsel would like that on the record.
Around this sits a joint venture holding hundred-year development rights to seventeen Venezuelan oil fields — which contain some sixty-five billion barrels of proven reserves — with the Pentagon’s Office of Strategic Capital as the federal backer and the State Department claiming fifty-five percent of the output. The President described it as the United States taking majority control of another country’s oil. The White House, the State Department, and the Pentagon all declined to explain how the arrangement works.
I want to set aside, for a few paragraphs, the question of what to call this. There is a more immediate question, and it is the one being asked this week by every investment committee that has been offered a piece of it.
An option, not a stake
A warrant is not ownership. It is a claim on someone else’s success, and the distinction is not technical — it determines who bears the risk and who receives the return.
NABEP intends to raise to $5 billion in debt to increase production to 1 million barrels per day within 5 years. That capital expenditure appears on NABEP’s balance sheet, and so does the risk of failing. The warrant rests with the United States government and costs nothing to hold. So when the President says the arrangement comes “at no cost to the American Taxpayer,” he is telling the truth in the narrowest sense. Nothing was appropriated. No barrel was purchased. Instead, what was extended was the one thing a government has that no private partner can offer: protection.
This creates a problem that is not rhetorical. Because a warrant is linked to the share price, the government’s financial interest is not simply in Venezuelan production. It is in NABEP’s valuation — and therefore in NABEP’s continued good fortune, commercial and legal.
This is not hypothetical. The Times reports that earlier this year, before any of this was announced, State Department officials urged the Swiss government to ease its investigations into Mr. Betancourt and asked the British to lift travel restrictions on him. The department issued him a multiple-entry visa so he could meet with administration officials in Washington.
Read the sequence in order. The United States lobbied a friendly prosecutor on behalf of a private businessman and then took an option on his company. Whatever one concludes about Mr. Betancourt — again, he has been charged with nothing, anywhere — that sequence is on the public record, and it is not one a government can answer by assuring us that its diligence was comprehensive.
The country that wrote the rule
Venezuela is not an incidental target here, and the instrument is not incidental either.
A hundred-year concession is not a modern petroleum contract. Modern contracts are production-sharing and service agreements that run twenty or thirty years and include review clauses, because the industry learned the hard way that terms that outlive the governments that signed them do not survive. The hundred-year concession belongs to an older grammar: the D’Arcy concession of 1901, which granted one British subject sixty years of Persia’s oil; the Red Line Agreement of 1928, which divided the former Ottoman territories among a handful of companies with a pencil. That grammar produced Mossadegh, then 1953, then everything after.
And it was Venezuela, more than any other country, that wrote the rule that replaced it. Juan Pablo Pérez Alfonzo co-founded OPEC in 1960. The UN General Assembly adopted Resolution 1803 on permanent sovereignty over natural resources in 1962. The Charter of Economic Rights and Duties of States was adopted in 1974, and Venezuela nationalized its oil industry in 1976. Whatever one thinks of what Chávez later did with that inheritance — and it was ruinous — the principle that a nation’s subsoil belongs to the nation is, in substantial part, a Venezuelan invention.
It has now been retired in Venezuela by an acting president who took office after American special forces seized her predecessor, in favor of a hundred-year concession held by a company registered in Barbados.
What a credit committee sees
Set the moral question aside entirely, and this still does not work as a financial proposition.
A title acquired under duress is not a title. It is a position that must be defended indefinitely by whoever benefits from it, and Venezuela already knows what that costs. When Chávez seized the Orinoco projects in 2007, ConocoPhillips and ExxonMobil brought claims at ICSID — the World Bank’s arbitration forum, where foreign investors sue host states and win awards enforceable in the courts of some 160 countries. Venezuela lost. It denounced the ICSID Convention in 2012 and lost anyway: walking out removed the forum but not the judgments. ConocoPhillips is still owed roughly eight and a half billion dollars, and an annulment panel confirmed as much again in January 2025. Anyone who followed the Crystallex litigation over Citgo’s shares in Delaware knows what creditors with judgments do the moment a distressed sovereign’s assets become collectible: they attach them. Every cargo lifted under this concession is a potential target, and the Barbados domicile and the federal warrant together make the sovereign-immunity analysis genuinely novel.
Nobody knows how that resolves. That is the point. A hundred-year asset whose ownership will be litigated for the first twenty years is not cash flow. It is a lawsuit with a pipeline attached.
Nor will it lower anyone’s gasoline price. Venezuela pumps a little over a million barrels a day — about one percent of global supply, roughly what it pumped under Maduro. The reserves are real, and they are extra-heavy Orinoco crude, which requires upgraders, years, and capital to become something a refinery wants. According to the Times, the administration’s actual theory is that Venezuelan barrels will eventually dilute Middle Eastern market power, which has become more valuable since the United States and Israel began striking Iran in February. That may even be sound. But it is a bet measured in decades, sold as relief at the pump.
The case I must answer
The strongest argument against everything above is not that this is lawful. It is that Venezuela was already a catastrophe, and something had to give.
That argument is correct as far as it goes, and it goes some distance. Maduro’s government was predatory, and its 2024 election was not credible. PDVSA was looted for two decades, leaving spills, flares, and abandoned wells that will take a generation to remediate. Roughly eight million Venezuelans have left. And foreign capital in extractive industries is not imperialism by definition — it is how most of the world’s oil is produced, and Venezuela badly needs it.
I grant all of that. None of it is an argument for these terms.
There is a version of Venezuelan reconstruction that proceeds through competitive tendering, ordinary-duration contracts, disclosure of counterparties, and ratification by the Venezuelan legislature. This is not that version. The difference is testable publicly on three points:
Publish the instrument, not a summary from a briefing — the document.
Disclose the warrant’s terms, including the strike price, size, who holds it, who may exercise it, on whose authority, and where it is carried on the federal books.
Submit the concession to a freely elected Venezuelan legislature.
None of these requires trusting anyone’s motives, and if the arrangement is what its architects claim it is, all three are straightforward. I expect none of them.
The word
I have avoided it this long because it arrives too easily and accomplishes too little once it does. But I don’t think there is another one available.
What was taken in Venezuela is not territory. No flag went up, and no one will administer it. It is an option on a nation’s subsoil, held through an offshore vehicle, pre-cleared by diplomatic pressure on a friendly prosecutor, and secured by the same force that removed the last government. That is not a colony in the old sense. It is something the old empires would have instantly recognized and envied: all the rent, none of the administration, and a hundred years to collect it.
The consequences will not come through the Security Council, whatever is said there. They will come from countries that spent the last decade being told that the rules-based order constrains the strongest player, too — India, Brazil, Indonesia, Nigeria, the Gulf states. They have now been handed an answer to that question, and they will price it. Quietly, at the margin, in reserve allocations, offtake contracts, and the currency in which a long-dated resource deal settles. Not as a rupture. As a slow repricing of what an American guarantee is worth to someone who is not currently useful.
For the rest of us, there is a simpler test, and it will be resolved within the year. NABEP has five billion dollars to raise. Someone will be asked to lend it.
Watch who says yes.
Thank you!
This is excellent. Best analysis I’ve read on the Venezuela oil deal.