Senate Democrats challenge Pentagon's 35% stake in Venezuelan oil producer

Letter questions whether Pentagon office can hold equity in foreign oil company

Four Senate Democrats are pressing the Trump administration to disclose the text and terms of the Pentagon’s plan to take a passive 35% stake in North American Blue Energy Partners, Venezuela’s second-largest oil producer, raising legal concerns about the arrangement and laying the groundwork for a potential probe.

The lawmakers, including Sen. Jeanne Shaheen (D., N.H.), the ranking Democratic member on the Senate Foreign Relations Committee, demanded the Trump administration produce the text and terms of the deal before it is finalized. Also signing the letter were Sen. Jack Reed (D., R.I.), the ranking Democrat on the Senate Armed Services Committee; Sen. Martin Heinrich (D., N.M.), the top Democrat on the Senate Committee on Energy and Natural Resources; and Sen. Elizabeth Warren (D., Mass.), the ranking member of the Senate Committee on Banking, Housing and Urban Affairs.

The U.S. unveiled plans in early September for the Pentagon to take a passive 35% stake in NABEP, which is set to receive control of 17 oil blocks said to contain some 65 billion barrels of oil. Venezuela says it has 300 billion barrels of proven oil reserves, more than any other country. As part of the arrangement, the State Department would get preferential rights to buy 20% of the production at cost. Since ousting Nicolás Maduro in January, Trump has pushed the U.S. oil industry to revitalize Venezuela’s oil fields, and he has called the arrangement with NABEP “the biggest oil deal in world history.”

The lawmakers are seeking the legal rationale for using the Pentagon’s Office of Strategic Capital to acquire an equity stake in a foreign oil company, and asked how the State Department would pay for the oil company’s output. The Wall Street Journal reported that the Office of Strategic Capital would structure its investment in NABEP through penny warrants that would yield the U.S. an equity ownership in the business without a significant capital investment.

The Democrats said the statute that created that Pentagon office doesn’t give it the ability to take equity stakes in private oil companies, and that the deal is inconsistent with its authority to provide loans and guarantees designed to support U.S. national-security interests. They also asked the administration to explain its vetting process and offer any insight into whether members of Trump’s family or his donors would benefit.

The Trump administration has said the deal would lower fuel costs for Americans, and that the oil would be used to boost the U.S.’s Strategic Petroleum Reserve, which is currently at its lowest levels since 1982. “The proposed agreement is unlikely to reduce high energy costs for Americans, and it risks undermining the Venezuelan people’s transition away from a dictatorship,” the senators said in the letter.

The lawmakers also expressed doubt that NABEP, led by businessman Alejandro Betancourt, could quickly scale up production to the heights the Trump administration has intimated. “It is unclear,” the lawmakers said, “why the American public should support this attempt to entangle the United States with a relatively unknown foreign oil company that lacks the capacity or credibility to develop oil fields of the magnitude described and whose leadership has faced international criminal investigations.” They noted that Betancourt, who has never been charged with a crime, has “faced multiple investigations for money laundering in Spain, Switzerland and the United States.” Rubio has said Betancourt isn’t under active investigation in the U.S.

NABEP, for its part, has moved quickly to line up 60 drilling rigs, 30 steam boilers that generate hot steam to move heavy oil, and dozens of other pieces of heavy equipment it hopes will enable it to more than double its production to 500,000 barrels a day by late 2028.

The plan “only creates new corruption risks for both the United States and Venezuela, while appearing to reward the kind of self-dealing that helped degrade Venezuela’s oil sector in the first place,” the lawmakers said in the letter. “Such actions undermine U.S. credibility in Venezuela, and the region at large, in the long term.”

House Democrats sent a similar letter to the administration. Many involved in Venezuela’s democratic effort have also criticized the deal, saying they worry it links the U.S. with the current Venezuelan government led by Delcy Rodriguez, who was a lieutenant of Maduro.

Lawmakers often set the stage for congressional investigations by sending letters requesting information from agencies, companies or other parties involved. Any future probe, however, would likely begin after the midterm elections in November — and would be contingent on the Democrats’ electoral success. The lawmakers, as part of the minority party, don’t currently chair the committees involved or have the power to call public hearings or issue subpoenas.

The letter advances a sequence MSI has tracked since President Trump announced the arrangement on August 29 as a “Historic Transaction” covering more than 65 billion barrels of proven oil reserves, and since internal documents described NABEP’s plan to deploy more than 50 drilling rigs under the administration-backed deal. House Democrats have sent a similar letter to the administration.