Alejandro Betancourt, the Venezuelan energy executive now partnered with the Trump administration, has started courting investors for oilfields the two sides will jointly control. The deal gives his company a stake in more than 65 billion barrels of Venezuela's reserves, but former diplomats and analysts warn its legitimacy and durability remain unproven.
Betancourt, who owns the second-largest private oil business in Venezuela, has begun talking to potential investors in the oilfields covered by an energy agreement between Washington and Caracas announced on Friday. Under the deal, he is the administration's minority partner in a company that will control more than 65bn barrels of the country's reserves.
The new company plans to award licences or form joint ventures with US energy groups and other investors across 17 different oilfields, some previously held by Chinese and Russian companies. Betancourt is a polarising figure in Venezuela because of his ties to the socialist government that has ruled since Hugo Chávez took office in 1999.
Deal terms and guarantees
Interim president Delcy Rodríguez said in a televised address on Saturday that the deal covers eight greenfield blocks in the Orinoco Oil Belt, with minimum royalties of 16% and income tax of 34%. She said the arrangement would last 25 years, while Trump had described it as a 100-year concession.
The Pentagon's Office of Strategic Capital, set up under Joe Biden to boost investment in technologies deemed critical for national security, will provide guarantees to companies taking on the licences and has the capacity to lend up to $200bn. Betancourt's company, North American Blue Energy Partners, produces about 200,000 barrels of oil a day and is negotiating with private investors including Lionheart Holdings, sponsored by Miami-based Lionheart Capital.
Major producers still on the sidelines
ExxonMobil and ConocoPhillips, which both had billions of dollars of assets expropriated in Venezuela, have so far decided not to invest. However, Chevron, Repsol and Eni have already struck agreements with Venezuela's government this year.
According to former US diplomat Brian Naranjo: "far more questions than answers" followed the announcement of the deal. Former Turkish diplomat Imdat Oner said the deal faces a legitimacy problem because Rodríguez was not elected, and a future government could challenge a century-long concession it did not authorise.
Elias Ferrer of Orinoco Research said the US deal could increase rather than reduce uncertainty for investors, since it relied on the Trump administration. Democrats, he said, would undoubtedly go after the deals if they win November's midterm elections.
Source: Markets (FT)
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