U.S. pitches Venezuela oil deal as a block on China and Russia

After a U.S. operation captured Nicolas Maduro, who led Venezuela, American officials signed a 100-year concession, a long-term right to produce oil, giving North American Blue Energy Partners control over 17 oil fields holding 65 billion barrels of reserves.

The agreement is being framed as a business deal to keep Venezuelan crude away from Russia and China, not as an effort to rebuild the country. Whether the money will improve life for ordinary Venezuelans, rather than enriching a small circle, remains unproven.

The U.S. government would hold 55% ownership of the deal. Under the terms, the Pentagon would hold a 35% ownership stake, the State Department could buy one-fifth of production at cost, and Blue Energy has promised about $100 billion to rebuild fields and pipelines. President Donald Trump said the deal would come at "no cost to the American taxpayer."

Venezuela holds about 300 billion barrels in total reserves, slightly more than Saudi Arabia. That count is contested because some people call about 200 billion barrels extra-heavy sludge unusable, with Sacks putting the remaining proven heavy reserves at about 100 billion barrels.

Investor David Sacks argued the oil fits American needs. He said U.S. fracking produces light, sweet crude, meaning thin oil with little sulfur that is easy to turn into gasoline, while Venezuela produces heavier oil that yields distillates, the diesel and jet fuel made from heavier crude. He said Gulf Coast refineries were built for heavy oil and would be costly to rebuild for light oil, so Venezuelan barrels fit them without major changes.

On price, tech investor Jason Calacanis put Venezuelan oil at an average of $53 a barrel over 10 years and $58 over five years. Sacks said Maduro had apparently sold to China at about a $20 discount.

Investor David Friedberg said the biggest motivation may be denying that discounted oil to Russia and China, which backed Maduro. He noted one risk: opposition leader Maria Corina Machado, who says she should have won the presidency, now says the interim government lacks authority to make the deal. The next test is whether production rises from about 1 million barrels a day, down from about 3 million, and whether the gains reach Venezuelans.