World Affairs
Pentagon oil venture puts investigated Venezuelan billionaire at center of U.S. deal
Washington says it vetted Alejandro Betancourt before structuring a 35% position in his oil company; reporting about closed and continuing investigations has intensified scrutiny of the arrangement.
Executive summary
- The structure: The U.S. government structured a 35% position in North American Blue Energy Partners through penny warrants and secured a right of first offer on the venture's oil output, according to a U.S. official cited by Reuters.[1][2]
- The partner: NABEP is controlled by Venezuelan businessman Alejandro Betancourt, who has been investigated by U.S. and European authorities over alleged money laundering but has never been criminally charged and denies wrongdoing.[1][2][3]
- The scrutiny: CNN reported that federal prosecutors recently closed a U.S. investigation as officials sought Betancourt's help on the oil deal; the Justice Department disputed that then-Deputy Attorney General Todd Blanche personally ordered the case closed.[4][5]
- The scale: The venture received 100-year rights to 17 Venezuelan oil fields estimated to contain 65 billion barrels, while the Pentagon-linked structure would let the government obtain equity at a token exercise price.[1][2]
A U.S.-backed plan to develop a large share of Venezuela's oil reserves has placed Alejandro Betancourt, a billionaire businessman whose dealings have drawn money-laundering investigations in several countries, at the center of an unusual Pentagon-linked commercial venture. A U.S. official told Reuters that Washington structured a 35% position in Betancourt-controlled North American Blue Energy Partners through penny warrants, giving the government the right to acquire equity at a token price while protecting the position from dilution.[1][2][3]
The official also said the Pentagon holds a right of first offer on the venture's production. Twenty percent could be bought at a price reflecting production costs, with the remainder purchased at market rates. NABEP has received 100-year rights to develop 17 Venezuelan fields estimated to contain 65 billion barrels, roughly one-fifth of the country's proven reserves, according to Reuters and the Associated Press.[1][2]
The arrangement has revived scrutiny of Betancourt's legal history. The Associated Press and the International Consortium of Investigative Journalists reported that authorities in the United States, Spain and Switzerland examined alleged money laundering connected to Venezuelan state assets. Betancourt has never been criminally charged, has denied wrongdoing and has said his business activities were lawful. A Spanish judge closed one investigation in March, though prosecutors appealed that decision; Swiss proceedings were reported as continuing.[2][3][5]
CNN reported Thursday, citing two people briefed on the matter, that federal prosecutors in Miami recently closed a long-running U.S. investigation as White House and State Department officials sought Betancourt's help arranging the oil agreement. A Justice Department spokesperson called the claim that then-Deputy Attorney General Todd Blanche personally intervened a fabrication and said Blanche had never instructed prosecutors in the Southern District of Florida to close the matter. Secretary of State Marco Rubio and other officials have said Betancourt was vetted and faced no U.S. charges.[4][2]
The Pentagon's role is itself unsettled. When the 35% stake was first reported, the department said its Office of Strategic Capital does not directly take equity and is limited to loans, guarantees and technical assistance. The later description of penny warrants indicates a structure intended to provide equity-like economics without an immediate conventional share purchase. The gap between those descriptions, the limited public documentation and the reported investigations of the venture's controlling shareholder leave significant governance and disclosure questions as the project seeks outside investment.[6][1][2]