U.S. inks sweetheart oil deal with major Venezuelan producer

U.S. officials signed a deal with a private oil company, North American Blue Energy Partners, granting the United States a guaranteed 20% of the company’s oil, the State Department said Monday. The company is the second-largest private Venezuelan oil producer, the department said. The 20% figure applies to all its current and future oil fields. The deal also gives the State Department the option to purchase the remaining 80% of the company’s oil in emergency situations.

The deal also grants the U.S. Defense Department’s Office of Strategic Capital a 35% stake in the corporate parent of the oil company. The State Department said that portion of the deal could generate hundreds of billions in value and dividends for the United States. Also, some of the oil would be processed through American refineries and pumped using American infrastructure, which should generate additional revenue and jobs, the department said.

Additionally, Venezuela’s interim authorities agreed to give the company 100-year usage of 17 oil fields with reserves estimated at roughly 65 billion barrels, according to the State Department. Most of the new oil fields the company plans to operate were previously controlled by Russian and Chinese firms, or by close allies of ousted Venezuelan leader Nicolás Maduro, the department said.

What does Venezuela get out of the deal? Acting President Delcy Rodriguez said she was deeply grateful for the deal for the following reasons:

• The oil company is expected to pay roughly $200 billion in taxes and royalty payments to the Venezuelan government over the next 25 years. The U.S. government will monitor the use of that money to ensure it benefits the Venezuelan people, the State Department said.

• The company also plans to invest about $100 billion in new oil infrastructure in Venezuela. The development will likely generate thousands of high-paying jobs and grow the Venezuelan economy, according to the State Department.

• The U.S. government also encouraged Venezuela to invest in the oil company, which could generate additional revenue.

Dig deeper: Listen to Nick Eicher and Mary Reichard’s explanation of why the deal may take a while to come to fruition.