The United States seized Venezuelan president Nicolás Maduro in January and replaced him with Delcy Rodríguez, setting the stage for a controversial oil arrangement.
The United States seized Venezuelan president Nicolás Maduro in January and replaced him with Delcy Rodríguez, setting the stage for a controversial oil arrangement. Former president Donald Trump had long expressed interest in acquiring oil from other nations, repeatedly suggesting the US should take control of foreign reserves after military interventions. In August, the Pentagon announced that its Office of Strategic Capital (OSC) would hold a 35% stake in North American Blue Energy Partners (Nabep), a Venezuelan oil firm. The administration described the deal as a way to refill the US strategic petroleum reserve and secure control over more than 65bn barrels of Venezuelan reserves.
Experts and current and former officials told the Guardian that virtually every claim made by Trump and his cabinet about the agreement is inaccurate or misleading. Venezuelan law restricts oil development contracts to a maximum of 25 years, yet the administration has promoted a deal that allegedly spans a century. The OSC, created under the Defense Production Act, has no legal authority to own equity in private companies, and Pentagon officials have acknowledged it cannot make equity investments. Instead, the ownership stake is being held by a separate office, Industrial Base Analysis and Sustainment (Ibas), which is tasked with strengthening the US defense industrial base, not managing foreign oil assets.
The deal centers on Alejandro Betancourt López, a Venezuelan businessman with ties to Spain, the UK, and New York. He owns Nabep alongside American executive Harry Sargeant and has previously worked with Rudy Giuliani, who served as his lawyer during Trump’s first term. Betancourt has been linked to multiple corruption investigations in Venezuela, including allegations of bribery and money laundering. Venezuelan authorities previously hired investigators and hackers to trace his financial activity, targeting his WhatsApp accounts, accountants, and legal representatives. While no formal charges have been filed against him in the US, he has been named in civil lawsuits and was questioned in a 2018 Miami case involving a $1.2bn money-laundering scheme.
The Pentagon has described the arrangement as a "historic opportunity" to gain majority control of Venezuelan oil reserves without taxpayer funding. However, the state department maintains the agreement is a private transaction between the interim Venezuelan government and a private company, and denies any formal political process was involved. The White House has stated that US citizens will hold a majority of Nabep’s board seats, though the exact structure of ownership remains unclear.
Oil industry analysts have expressed skepticism about the deal’s viability. ExxonMobil CEO Darren Woods previously called Venezuela "uninvestable" due to its legal and commercial environment. Phil Gunson of the International Crisis Group noted that major investors are avoiding the arrangement due to its opacity and questionable legal foundation. Former US diplomat John Feeley compared the proposal to a wall that "Mexico will pay for," emphasizing the gap between rhetoric and feasibility.
The deal’s structure involves complex financial mechanisms. While the administration claims it will secure control over Venezuelan oil at no cost to taxpayers, the mechanism for purchasing crude at below-market rates has not been clarified. The Pentagon has stated that the US will have the right to buy 20% of Nabep’s oil production at cost, but the process for executing these purchases remains undefined.
The involvement of Betancourt has drawn particular scrutiny. He was brought into the deal through connections with Senator Marco Rubio’s associates and has hosted political and business figures at his Spanish estate, El Alamín. In 2024, Spanish authorities investigated him for money laundering, though no charges were filed. His background includes contracts with Derwick Associates, a firm linked to kickback schemes in Venezuela, though those allegations were dismissed in court due to insufficient evidence.
The legal uncertainties surrounding the deal have created tension within the administration. While Trump has framed the arrangement as a decisive victory, internal disagreements persist over its execution. Former Pentagon official Stephen Feinberg, who oversees the OSC, has been central to shaping the financial framework, but his office’s authority to make equity investments has been questioned by legal experts. Ashley Deeks, a law professor at the University of Virginia, noted that Congress never intended for the OSC to function as a private equity vehicle.
Despite the administration’s claims, the deal appears unlikely to deliver the promised benefits. Venezuelan legal experts confirm that the agreement cannot legally span 100 years, and the country’s interim government has stated the contract is limited to 25 years. Moreover, the strategic petroleum reserve remains at historically low levels, and there is no indication that Venezuelan oil will be integrated into it in the near term.
The situation reflects broader shifts in US foreign policy and defense strategy. The Pentagon’s transformation into a financial actor through the OSC represents an unprecedented expansion of military authority into private enterprise. Whether this model can be sustained or replicated in other contexts remains uncertain, particularly given the lack of legislative support and the significant legal barriers identified by experts.
As the administration continues to promote the deal, the gap between its public statements and the underlying legal and logistical realities continues to widen. While Trump has described the arrangement as "the biggest deal ever made," the practical challenges of implementation suggest that the proposal may not withstand close scrutiny.