US shields its 35% stake in Venezuela oil venture from dilution

The US government has structured its 35% stake in a Venezuelan oil venture as penny warrants, a move designed to protect Washington's ownership from being diluted by future capital raises, a US official said on Thursday.

The official, speaking on background, explained that the Pentagon holds warrants in North American Blue Energy Partners (NABEP), giving the US the right—but not the obligation—to buy equity later at a token price. This structure ensures that as NABEP raises billions needed to develop the oilfields, the US stake remains intact.

"So that way the US government will realize 35% of the full value of the project once it reaches mature production, as opposed to being diluted in the interim," the official said. The arrangement also entitles the US to dividends before the warrants are exercised, effectively granting all benefits of equity ownership without immediate purchase.

NABEP, controlled by Venezuelan businessman Alejandro Betancourt, was granted 100-year rights to 17 oilfields with an estimated 65 billion barrels of reserves. The concessions were awarded without a competitive process as part of a deal between Washington and Caracas following the removal of Nicolas Maduro.

The Pentagon also secured a right of first offer to purchase NABEP's oil output, with 20% available at production cost rather than market rates. The deal has drawn scrutiny over Betancourt's past business dealings, though he has never been charged and denies wrongdoing.

Venezuela's oil output, currently around 1.1-1.2 million barrels per day, could more than double in coming years as separate agreements with Chevron, Eni, ONGC, GeoPark, and GE Vernova take effect, according to Energy Secretary Chris Wright.

Separately, the official said Pentagon employees who previously worked at Cerberus Capital Management must recuse themselves from transactions involving that firm's assets, directing such matters to Commerce Secretary Howard Lutnick for review.