On August 28, the United States announced it had secured majority control over approximately 65 billion barrels of Venezuelan oil reserves through North American Blue Energy Partners (NABEP), a private company with close government ties. The White House described the arrangement as the largest oil deal in history, granting NABEP 100-year concessions on 17 oilfields rich in proven reserves. The deal reportedly includes a 35 percent Pentagon stake, a 20 percent State Department off-take at cost with a right of first refusal, and US veto power over board appointments, which must predominantly be US citizens.
Officials indicated this move is designed to redirect Venezuelan oil previously shipped to China to the United States, implementing a strategy aimed at displacing China as a strategic competitor in Venezuela’s energy sector. This approach, labeled by analysts as a form of indirect expropriation, reflects a broader US policy shift that mirrors prior efforts against Iran’s oil industry.
While Venezuela holds an estimated 303 billion barrels of oil reserves, currently producing roughly 1 million barrels per day, analysts caution that the projection of a rapid increase to 3 million barrels daily is highly optimistic. Restoring and expanding production in Venezuela’s Orinoco Belt—a region with heavy, extra-heavy crude—would require around $183 billion in investment over 15 years, according to Rystad Energy, a figure notably higher than the $100 billion pledged by NABEP.
Several factors complicate the outlook. The break-even cost for producing heavy oil in the Orinoco Belt exceeds $80 per barrel, above the typical project approval threshold of $50-60. Additionally, Venezuela’s oil is high in sulfur and heavy in nature, necessitating costly diluting and upgrading processes. These factors contribute to lower profit margins despite current global crude prices. Moreover, the scale of required investment surpasses any similar projects, with Alberta’s oil sands—a geological analogue—having taken decades of development to reach their production levels.
The structure of NABEP is seen as a key innovation by the US administration, enabling the government to exert control indirectly in countries where direct sanctions could complicate relations with other powers such as China. Six of the 14 concessions granted to NABEP had previously been held by foreign firms, including five Chinese companies and one Russian firm, effectively overriding their contractual rights without formal expropriation.
China’s official response has been cautious. On September 1, Foreign Ministry spokesman Guo Jiakun emphasized that cooperation between China and Venezuela is protected under international and bilateral law and that Chinese interests in Venezuela must be safeguarded. Beijing refrained from singling out NABEP or threatening direct retaliation but underscored the need to uphold contractual and legal protections.
Analysts note that China’s restrained posture reflects a recognition of the interim Venezuelan government’s reliance on Washington and the constitutional declaration that Venezuela’s oil resources remain state-owned and not subject to privatization. Some experts have questioned the legality of the deal under Venezuelan law. Furthermore, the Pentagon’s stake in NABEP comes without direct taxpayer funding, aligning with domestic political considerations ahead of upcoming US elections.
Despite the US assertion of control, practical challenges remain significant. The heavy oil fields require substantial time, capital, and technological investment before production can scale, and geopolitical legitimacy issues cloud the interim government’s future. China maintains significant financial leverage through over $60 billion in oil-backed loans since 2007, providing economic influence that cannot easily be nullified by the purported long-term concessions to NABEP.
The Venezuela arrangement sends a signal to foreign investors that US-backed proxies could potentially invalidate contracts in politically unstable environments. Nonetheless, the realities of oil production and market dynamics impose limits on how swiftly and decisively such strategic moves can reshape global energy flows. Analysts contend that true energy dominance requires sustained investment and expertise, not executive declarations, suggesting that the announced deal may fall short of its ambitious claims.