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Trump’s Venezuela oil deal needs $100 billion: Who will fund the massive oil investment?
Trump’s Venezuela oil deal needs $100 billion in investment. NABEP must raise the money as the US seeks more oil, lower gas prices and a stable supply.
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Trump’s Venezuela oil deal could need about $100 billion in investment. The money would be needed over the coming years to build the infrastructure required to bring Venezuela’s oil out of the ground and increase production.
The biggest question is still: Who will provide the $100 billion? While several parts of the agreement between the US government and Venezuela have been explained, there is still no clear answer on where the huge amount of capital will come from. That funding question has become one of the biggest unanswered issues surrounding Trump’s Venezuela oil plans.
US says it will not use taxpayer money
The US government says it will not put taxpayer dollars into the project. A US official told reporters on Tuesday that Washington’s goal is to use its support for the deal to help NABEP attract the private capital needed to quickly increase oil production. The official said the US government is making “zero investment of dollars” in the new venture.
NABEP will raise the $100 billion
North American Blue Energy Partners, or NABEP, is expected to raise the money. The private Venezuelan company will be responsible for raising the capital and carrying out the drilling work needed to increase oil production, according to Yahoo Finance. NABEP is led by businessman Alejandro Betancourt. The company is set to receive leases for oil fields in Venezuela under the new agreement with the US government.
What does the US get from the deal?
In return, the US government will get a 35% stake in the new venture. NABEP will give the US government a 35% equity interest in the business as part of the agreement. The US will also get access to part of the oil produced by the company. Washington will have the right to buy 20% of the company’s future crude oil production at production cost, according to the deal details reported by Yahoo Finance.
The US could also buy the remaining 80% of the new oil output. The agreement gives the US government the option to purchase the other 80% at market prices if it chooses to do so.
Venezuela has billions of barrels of oil
The oil fields involved are huge, but they are only part of Venezuela’s total reserves. Geologists estimate that the fields covered by the deal contain around 65 billion barrels of oil, according to Yahoo Finance. That is roughly one-fifth of Venezuela’s total estimated oil reserves of 303 billion barrels, according to the US Energy Information Administration.
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NABEP wants 1 million barrels a day
NABEP says it wants to increase production to more than 1 million barrels per day. In a press release this week, the company said it plans to rapidly expand operations in Lake Maracaibo and the Orinoco Belt, with a near-term target of producing more than 1 million barrels of oil every day, according to NABEP.
The company has already sharply increased its production. NABEP’s output has risen from about 18,000 barrels per day to around 200,000 barrels per day in recent years, according to internal company documents obtained by The Wall Street Journal.
More than 50 drilling rigs planned
NABEP plans a major drilling expansion. The company plans to deploy more than 50 drilling rigs as it tries to increase production further.
But there is still a major question over whether NABEP can deliver that much growth. A NABEP representative told Yahoo Finance that the company is confident it can keep increasing production as the financing is arranged. However, it remains unclear whether the company can expand quickly enough to meet the very ambitious targets promised by Trump.
Trump says gas prices could fall
Trump has made big promises about what the Venezuelan oil deal could mean for Americans. When he announced the agreement last Friday, Trump said the deal would substantially lower gas prices for Americans.
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Trump says the production increase could happen very quickly. Trump said on Monday that oil production would increase faster than experts expect. He said, “It’s going to go fast,” and suggested Americans could feel the impact within the next two years, according to Yahoo Finance.
White House wants cheaper oil for US
The White House wants the deal to create a stable source of cheaper oil for the US. A White House fact sheet said the goal is to secure “a stable supply of low-cost oil” for the United States, including oil that could help refill the country’s Strategic Petroleum Reserve.
The administration says the plan will not cost American taxpayers. The White House said the Venezuelan oil arrangement is designed to help refill the Strategic Petroleum Reserve “at no cost to the American taxpayer,” according to its fact sheet.
However, refilling the Strategic Petroleum Reserve will not be as simple as simply taking Venezuelan oil and putting it into US storage. Yahoo Finance noted that there are additional issues involved in carrying out that part of Trump’s plan.
Betancourt’s role and past
The Trump administration is backing Betancourt’s ability to deliver the project. US officials have described Betancourt as a “proven operator” and pointed to NABEP’s existing production as evidence that the company can expand further, according to Yahoo Finance.
NABEP is already the second-largest private oil producer in Venezuela. The Trump administration says the company currently ranks second among private producers in the country and wants it to eventually overtake Chevron as Venezuela’s leading producer.
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Betancourt’s past has also raised questions about the deal. He became prominent in Venezuela after developing ties with former Venezuelan leader Hugo Chavez, but later fell out with Chavez’s government. Betancourt has also faced criminal investigations in Europe. He has faced investigations in Spain and Switzerland linked to allegations of money laundering.
Deal also has a US-China-Russia angle
The Trump administration also views the oil agreement as a national security victory. Much of the land involved in the deal had previously been leased to Russian and Chinese energy companies, according to Yahoo Finance. Bringing more of the oil business under US influence could therefore reduce the role of those countries in Venezuela’s energy sector.
Chevron is also investing in Venezuela
Chevron is separately expanding its own Venezuela operations. The Trump-NABEP agreement is not the only US-linked oil development taking place in Venezuela. Chevron has separate plans to develop other oil-producing areas in the country.
Chevron already produces about 300,000 barrels of oil per day in Venezuela. The Houston-based oil giant announced new investment plans on Wednesday as it looks to expand its presence in the country.
The big question: Who pays?
So, the central issue is not whether Venezuela has enough oil — it clearly does. The bigger challenge is finding the enormous amount of money needed to develop the fields, build infrastructure and rapidly increase production.
That leaves the $100 billion funding question at the heart of Trump’s plan. NABEP is expected to attract private investment, while the US government says it will provide political and strategic backing rather than direct taxpayer funding.
Until the financing is secured, however, it remains uncertain how quickly Trump’s promised surge in Venezuelan oil production can actually happen.
