WASHINGTON: The U.S. government has structured its 35% interest in a Venezuelan oil venture to prevent its ownership from being reduced as the project raises additional capital, according to a U.S. official.
The official said Washington’s stake in North American Blue Energy Partners (NABEP) was arranged through “penny warrants,” giving the U.S. the option to purchase equity at a nominal price at a later stage. The warrants were structured by the Pentagon as part of a deal announced by President Donald Trump last week.
NABEP, which is controlled by Venezuelan businessman Alejandro Betancourt, has received 100-year concessions covering 17 oilfields believed to contain an estimated 65 billion barrels of reserves.
The concessions were granted without a competitive bidding process as Washington seeks to help rebuild Venezuela’s oil industry following the removal of former President Nicolas Maduro by U.S. forces in January.
The U.S. official said the financial arrangement was specifically designed to preserve Washington’s 35% economic interest while NABEP secures the substantial funding required to develop the fields.
Developing and significantly expanding offshore oil production is expected to require billions of dollars in investment. Without safeguards, new capital raised by the company could reduce the U.S. government’s ownership percentage.
Under the warrant structure, Washington can maintain its share until the project reaches mature production. The official said this would allow the U.S. government to retain the full economic value associated with a 35% stake rather than seeing its interest reduced during the development phase.
The arrangement also provides the U.S. with financial benefits before the warrants are exercised. According to the official, Washington will be entitled to dividends as an equity holder while retaining protection against dilution.
The Pentagon also holds a separate right of first offer covering NABEP’s oil production. Under the agreement, the U.S. can purchase 20% of the company’s output at a price based on production costs, while the remaining volumes would be available at market prices.
The Venezuela arrangement has faced scrutiny because of Betancourt’s previous business activities, which have been examined by authorities in the United States and Europe. He has not been charged with wrongdoing and has denied any misconduct.
U.S. officials have defended the broader agreement, describing it as part of efforts to rebuild Venezuela’s energy sector while strengthening the country’s alignment with American economic and energy interests.
Venezuela’s oil production has fallen sharply from more than 3 million barrels per day in the late 1990s amid years of economic turmoil, sanctions and mismanagement. Current production is estimated at roughly 1.1 million to 1.2 million barrels per day.
U.S. Energy Secretary Chris Wright said this week that Venezuela’s output could more than double within several years as new investments take effect. Separate agreements involving companies including Chevron, Eni, ONGC, GeoPark and GE Vernova were also announced on Wednesday.
The U.S. official separately said Pentagon personnel with previous ties to Cerberus Capital Management, which is not involved in the Venezuela oil arrangements, must recuse themselves from transactions involving the private equity firm’s assets.
Such matters are to be referred to Commerce Secretary Howard Lutnick for review and approval, the official said.
The disclosure comes as lawmakers seek greater transparency over contracts involving companies affiliated with Cerberus. They have also called for clearer separation between Deputy Defense Secretary Steve Feinberg, a Cerberus co-founder, and Pentagon procurement decisions.