How the Pentagon Is Getting Into the Venezuelan Oil Business Under Trump
NYT > U.S. > Politics — 2026-09-01 11:12:00 — www.nytimes.com
Trump Announces Controversial Pentagon-Backed Oil Deal with Venezuela, Faces Scrutiny Over U.S. Military Involvement
President Trump announced Friday that the Pentagon, through its Office of Strategic Capital, has reached a deal with Venezuela to secure billions of barrels of oil reserves “through a partnership with private business.” Trump stated that Defense Secretary Pete Hegseth and Secretary of State Marco Rubio negotiated the agreement with the Venezuelan government, which centers on a partnership with North American Blue Energy Partners, a company led by the polarizing international businessman Alejandro Betancourt López.
Deal Details and Government Stake
Under the terms described by Trump, the Pentagon would have the option to take up to a 35 percent stake in the parent company of Betancourt’s firm. This stake would be acquired through “penny warrants,” a financial instrument that allows the government to buy shares at a nominal price, often just one cent. The arrangement also guarantees the U.S. government preferential access to much of the oil produced by the company.
The White House claimed the deal would come “all at zero cost to the United States,” suggesting that the federal government’s involvement could help the company attract private investment and shield it from legal or political risks in Venezuela.
Criticism and Contradictions
The announcement has drawn sharp criticism from Democratic lawmakers. Senator Jack Reed of Rhode Island, the top Democrat on the Senate Armed Services Committee, called the move “a blatant abuse of power and taxpayer dollars,” demanding a full accounting of the legal authority and financial terms behind the deal.
There is also confusion and contradiction within the administration. While the Pentagon’s chief spokesman, Sean Parnell, claimed the office “does not take equity stakes in private companies,” the White House’s statement and reporting by The Wall Street Journal indicate the government could hold a 35 percent passive equity stake and receive warrants.
Potential Conflicts and Oversight Concerns
The Office of Strategic Capital, which was originally created to boost U.S. weapons manufacturing and reduce reliance on Chinese supply chains, has shifted its approach under Trump. The office, now led by David Lorch, has expanded its loan authority from $1 billion to $200 billion, largely due to Trump’s domestic policy legislation.
The office’s recent deals have raised concerns about conflicts of interest, including a $620 million loan to Vulcan Elements, a company with financial ties to Donald Trump Jr. This has prompted further scrutiny from Democratic senators.
Unusual Government Role and Long-Term Impact
The deal would also give the State Department the right of first refusal to buy the remaining 80 percent of the company’s oil output, an unusual role for the agency. Any decision to purchase oil for U.S. stockpiles would require Congressional authorization and is typically managed by the Energy Department.
Despite the sweeping terms, experts note that it could take years for new projects in Venezuela to produce meaningful amounts of oil.
Conclusion
President Trump’s announcement of the Pentagon-backed oil deal with Venezuela marks a significant and controversial shift in U.S. government involvement in foreign energy markets. The deal’s structure, potential conflicts of interest, and internal contradictions have sparked intense debate and calls for greater transparency and oversight. As the administration moves forward, the long-term implications for U.S. energy policy and military involvement in commercial ventures remain to be seen.
Source: https://www.nytimes.com/2026/08/31/us/politics/pentagon-venezuela-oil.html