The Pentagon has taken an unconventional approach to bolstering U.S. strategic resources by entering into a partnership centered on Venezuelan oil production. This development, announced last week by former President Donald Trump, involves the Department of Defense’s Office of Strategic Capital working with the Venezuelan government and private oil interests to secure access to billions of barrels of oil reserves.

Established in 2022 during the Biden administration, the Office of Strategic Capital was initially tasked with investing in defense industrial capabilities to address weaknesses exposed by global supply chain disruptions and reliance on foreign manufacturing, particularly from China. The office operates under the authority of Deputy Secretary of Defense Stephen A. Feinberg and is now led by David Lorch. Its scope of financial authority has expanded from an initial $1 billion to $200 billion, following legislative boosts during Trump’s presidency.

The newly publicized oil deal involves North American Blue Energy Partners, a private oil company founded by Alejandro Betancourt López, a controversial figure with past investigations into money laundering and tax fraud in Europe. Under the terms, the Pentagon would receive warrants granting it the right to acquire up to a 35 percent stake in the parent company at a nominal price. Additionally, the U.S. government would gain preferential access to oil produced by the company, obtaining 20 percent of output at favorable prices, with the State Department holding the right of first refusal on the remaining 80 percent.

Officials have indicated that the arrangement would come at “zero cost to the United States,” relying on financial instruments rather than direct expenditures. The partnership is expected to facilitate private investment in Venezuelan oil projects and provide some insulation from the country’s political and legal uncertainties. The State Department’s role in potentially purchasing and managing oil supplies is unusual, given that such activities typically fall under the Energy Department or private market operations. Moreover, experts note that it would likely take several years before Venezuelan fields could generate significant new oil production.

The deal has drawn sharp criticism from Democratic lawmakers, including Senator Jack Reed, the top Democrat on the Senate Armed Services Committee. Reed described the Pentagon’s involvement in Venezuelan oil as a misuse of power and taxpayer funds and called for a thorough review of the legal authority behind the agreement and full disclosure of its financial terms.

Controversy also surrounds Mr. Betancourt, whose company holds contracts in Venezuela that were awarded without competitive bidding. Although under investigation abroad, he has not been charged with any crimes. The U.S. State Department reportedly intervened with Swiss and British authorities to ease restrictions on his travel to facilitate negotiations.

Pentagon officials have sought to downplay the government’s equity stake, with Chief Pentagon Spokesman Sean Parnell stating that the office “does not take equity stakes in private companies.” However, White House communications have confirmed the government’s potential ownership position through warrants and its access to oil production.

This arrangement represents a significant departure from traditional U.S. strategy, blending defense industrial policy with energy resource management amid ongoing geopolitical tensions and evolving global energy markets. The full implications of the deal remain unclear as lawmakers and oversight bodies continue to seek more information.