Trump Needs a Win. Enter His Venezuela Oil Deal

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1:45Bloomberg Audio Studios. Podcasts. Radio. News. Liam, you'll excuse the cynicism here, but do you see this as a bet on the next hundred years? Or is this more a bet on something tangible happening here in the next eight weeks leading up to the midterm elections here in the U.S.? The next hundred hours? In terms of what the U.S. wants here, or what Trump wants, I think you can answer that on two levels. So there is the kind of grand strategy long term answer, which is that the U.S. can somehow fashion some kind of Western Hemisphere like oil fortress and Venezuela will be very much a part of that.

2:22The other answer to that question is that Trump needs a win on what he did in Venezuela. He badly needs to signal that he's noticing people's unease about fuel prices, which are, you know, diesels at a record. Gasoline is close to a record. You know, it's very possible that we may enter the midterms with gasoline above$4 a gallon on average for the very first time. it's clear that this is really weighing on the administration. And that's why I feel like, you know, the holes and the contradictions in this deal, to me, speak to the need to send a signal and, you know, worry about the execution later.

3:12I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, on a day when oil has once again topped$100 a barrel, we talk to Liam Denning, who writes about energy for Bloomberg Opinion, and Patricia Laya, Bloomberg's Andes bureau chief, about the Trump administration's plan for the U.S. to take a stake in Venezuela's oil reserves.

3:35So late last month, President Trump announced what he's calling the biggest oil deal in world history. Describe that deal in broad strokes, if you would. Broad strokes is all we've got. Essentially, what the president was announcing was that the U.S. government would be essentially going into some kind of joint venture or taking a stake in North American Blue Energy Partners, a local Venezuelan operator, taking a 35 % stake apparently. And that venture would develop 17 oil fields in Venezuela, which apparently sit upon 65 billion barrels of reserves, roughly a fifth of the country's touted oil reserves.

4:19and in return the U.S. seemingly would pay no money for this up front and would get 20 percent of any production at cost and then a right of first refusal on the other 80 percent which I assume would be you know in the event of some kind of major global disruption the U.S. would be able to you know claim that oil. How much did this announcement catch you by surprise? I think the fact that there was an announcement didn't surprise me. It's been clear since Trump authorized a military operation that removed Nicolai Maduro in January, that he sees this as very much facilitating some kind of oil deal.

5:01I think what has surprised me was the nature of it. The idea that the US is effectively going to form some kind of quasi-national oil company with the federal government taking a direct stake. That did surprise me a lot. And I think it surprised a lot of people. Pat, I wonder if we could review sort of how we got to where we are, how we got to the place where Delcy Rodriguez could make this announcement. This has been a chaotic year in Venezuela, to say the least. Right. So as we all know, Maduro was captured by U.S. forces in the early hours of January 3rd. And Delcy Rodriguez was his vice president.

5:36In fact, she was vice president, finance minister, president. She had all sort of roles, very important influential roles within the Maduro government. And constitutionally, once the president is gone, of course, she as vice president would take that role. But also, I think the U.S. saw in Darcy Rodriguez a more pragmatic Chavista official through which they could heavily influence policy, right, over Venezuela. And how has that announcement played in Venezuela? What's the reaction been to it? So locally, it wasn't received very well. I mean, I think interim president Nancy Rodriguez has received criticism from both ends of the political spectrum.

6:18On the one end, hardline Chavista supporters see it as her gifting Venezuela's oil or sort of surrendering Venezuela's sovereignty over its oil reserves. On the opposition side, they are quite wary about this deal and about sort of the strengthening relationship between the U.S. and Venezuela's interim government and what that could mean in terms of entrenching Delcy Rodriguez in power in the long term and the legitimacy she holds in signing such a long term agreement over Venezuela's oil resources. But Venezuela has really stressed that it would remain or retain sovereignty over these resources underground, while the U.S.

7:02has framed it differently. I guess all of this brings up a kind of really fundamental question as we try to make sense of this agreement so much as we know about the details. And that is, does Delce Rodriguez have the legitimacy and the authority to sign off on a deal like this one, given the kind of interim position that she occupies right now? That is a huge question that everybody's asking because Maduro was called illegitimate by the U.S. before he was captured, right? And even the U.S. said that the election that he says to have won in 2024 was completely fraudulent, right? And she was declared his vice president under the same election.

7:40And so there are a lot of questions about whether she can sign this kind of agreement under an interim government, much less one that ties the government for decades and decades to come. Patti, let me ask you just about the way that this is reverberating in the politics of Venezuela right now. So this month, the second round of political negotiations between the Chavistas and the opposition are set to start. And in its fact, the White House was very careful in adding that they supported still those talks toward a democratic transition. That said, this has really shaken up the opposition, particularly the party of Maria Corina Machado.

8:20She has been very careful, right? She has questioned the terms and Rodriguez's authority, but really stopped short of demanding the deal to be totally scrapped and said the U.S. should be Venezuela's natural energy partner. I think she is wary about Trump's and Elsi Rodriguez's relationship and how this could entrench Rodriguez's government and reduce the U.S. incentive to press for quick elections in Venezuela. But I think she wants to present the opposition as a more credible, long-term partner for Washington and international investors. So she's also come out and said her own proposals for what an energy partnership with Venezuela would be like, sort of contrasting the durability of investments that could take place under a legitimate and democratically elected government.

9:13She knows she wants to run for election in the future. She knows that she will need the U.S. backing to do so. So she's walking a very careful and delicate line at the moment. Liam, how do you think about this question? Of course, there have been past governments in Venezuela that have famously nullified international oil deals. As you look at this one, is there anything in it that you see that could stop a future government from scrapping this one completely? So this is the key question, right? The durability of any agreement. There was a really interesting line in the fact sheet that the White House released about this deal, which I think got a bit lost, where they said that getting large-scale investment into Venezuela's oil industry was a, quote, key precondition to any kind of democratic transition.

10:03I think that's important because, well, for two reasons. One is kind of tells you where the White House's priorities lie, which comes first. But the second is I think they've got it backwards. You know, oil companies are no strangers to dealing with unsavory or unstable high-risk regimes. If you look at the first Venezuelan oil boom, which ran from, you know, the 20s basically through the 60s, I mean, for a lot of that period, Venezuela didn't have democratically elected governments. That didn't stop all companies doing business there. But in this case, the amount of money that has to be invested to rebuild Venezuela's industry, the nature of the oil resource itself, a lot of extra heavy oil takes a lot of processing.

10:48The fact that it will take a very long time to even rebuild the power grid. You're asking oil companies to go in for decades to do this and invest a huge amount of money. I mean, the government itself has talked about$100 billion to raise production by one and a half million barrels a day, which, you know, you do that math, that's a pretty capital intensive proposition right there. And I think if you go back to when Maduro was first deposed, remember, you know, Trump was pretty offended by the fact that Exxon said this country is basically uninvestable. He was expecting all companies to, you know, shake his hand, thank him and just rush back in there.

11:27And of course they didn't. And I think particularly in the context of high energy prices amid the war in Iran, the president is looking for a win here. And I think he feels that by doing this, he will somehow force the industry's hand. I think there may also be an aspect to this. You know, I was sort of mindful of the wreckage of the ballroom in the White House. You know, you might think if this deal somehow passes muster within this administration, but we get a democratic administration starting in 2029, Trump's reasoning here may be, well, if we strike this deal and we get it going and we invest money or we advance loans, and basically the federal government is at that point on the hook for this, will a future administration really roll it back?

12:20will a future Congress really roll it back? Just as if you knock down a ballroom and rebuild it, will someone else come and really tear it down later? Maybe not. But in fact, I think they've actually amplified the risk because you're dealing with an unelected, unpopular regime in Venezuela. The US administration is itself facing potential setbacks in midterms that are about to land here. Trump's own term in office expires in just over two years. Which oil company, which Western oil company is really going to think, well, you know, if we go in now, sure, we're there for 30 years. Everything's hunky dory.

13:02No, probably not. More on the U.S.'s partner in Venezuela and the difficulties of making a deal there durable after the break.

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15:25The U.S. says it's taken a stake in the company at the center of this deal, North American Blue Energy Partners. Liam, what is it exactly? You tell me. I mean, it is a local operator run by this figure, Alejandro Betancourt, who is himself a controversial figure. But let's be honest, we're talking about a company that is now at the heart of an industry that is both critical to Venezuela's future and, from the Trump administration's perspective, critical to U.S. energy security. And we know barely anything about it. I haven't even seen a balance sheet for this company that is supposedly going to lead$100 billion of investment in one of the most challenging oil development environments on Earth.

16:21We're not even sure exactly how legal the purported investment by the Pentagon is. It seems like the administration is really stretching the language. I'm going to pause there just to say that's a wild thing. You have the Defense Department holding a stake in this company. Yeah, I mean, my reading of the Office of Strategic Capital is that it's there to, you know, advance loans. It's mainly for critical minerals, I guess, if you squint hard enough. Crude oil fits that description. But it's far from clear if any of this stuff would hold up if it were challenged in court. Patty, we're talking here about North American Blue Energy Partners.

17:02Don't know a whole lot about that company or that concern. we do know something about the man who controls it. That's Alejandro Betancourt. Tell us a bit about him, if you would. Yeah, so Alejandro Betancourt is a well-known name to Venezuelans because he's part of a clan known as Boli Chicos, which is a class of Venezuelan entrepreneurs who amassed huge fortunes under President Hugo Chavez's government. And in his case, he won billions of dollars in emergency power equipment contracts beginning around 2009. during years in which Venezuela was plagued by chronic blackouts. He did this through a company called Derwick, which ultimately came under scrutiny in Venezuela, the U.S., Spain, and even other countries who suspected it had money laundering ties involving PDVSA Petroleos de Venezuela, the state-run oil company in Venezuela.

17:56Of course, Derwick and Betancourt have denied allegations. But since those days, Betancourt has now assumed control of Venezuela's leading independent oil producer, which is Navep. And by itself, I mean, Navep pumps about 200 ,000 barrels of crude a day in Venezuela, which is not a small amount for an independent producer in Latin America. So he, I think, to the Trump administration, represents someone who has deep ties across both of Venezuela's political factions and also has sort of a proven track record of producing oil at a large scale in a very complicated country and also during a period of sanctions.

18:38Leib, I'm curious sort of how the major oil companies view this deal, what we know of how they've reacted to it and sort of the degree to which they were involved in this, if at all. I mean, my understanding is that they were not involved in this deal per se. My read of it is that, look, they like the mood music here, right? They like the fact that there is this administration in Washington that is determined to reopen Venezuelan oil production. is as in the oil is there. But, you know, we saw under the Chavista regime, you know, essentially the national oil company gutted of expertise. We saw the physical infrastructure run away, production collapsing.

19:23So clearly there's a big opportunity there. I think for the oil companies, it's good to have Washington focused on reopening Venezuela, but I think they probably want to keep a fairly healthy distance from this other venture that's being talked about. Patty, given the hurdles and the complications that we've talked about, both in the U.S. and in Venezuela, what needs to happen for it to be a success? I think it will be quite challenging for this deal to be a success. I think many of these 17 fields are very far from the infrastructure that regularly operates at some level in Venezuela's oil production.

20:04many of these fields will likely not even you know start production in the next year or even in the coming years if anything it could be deemed a success if it increases production maybe by 100 ,000 to 200 ,000 barrels by next year but of course that will not have an impact on U.S. field prices that will not have an important effect on you know production oil production worldwide. So I don't think it will have a meaningful impact for the U.S. voter expecting to see meaningful consequences from what Trump called one of the biggest energy deals signed in recent time.

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