Venezuela Oil Deal Names Betancourt as China Protests and Krugman Attacks Concession

VENEZUELA · ENERGY

One day after the White House published the terms of its Venezuela oil deal, the concession has a face — Alejandro Betancourt — and its first diplomatic casualty: China, which watched fields its companies ran for years pass to a US-backed operator and is now formally demanding protection for its interests.

Betancourt, the partner Washington chose

NABEP was previously owned by US oil trader Harry Sargeant III and is now controlled by Betancourt, US officials told Reuters. The Venezuelan businessman built his initial fortune through Derwick Associates, an engineering firm that won multibillion-dollar power contracts under Hugo Chávez, and he remains the subject of investigations by US and European authorities. He has never been charged and denies any wrongdoing.

His path back into Washington’s good graces has been swift. Voz Media reported that after US intervention, Zurich prosecutors withdrew an extradition request against Betancourt in the United Kingdom and the State Department granted him a multiple-entry visa, while former White House adviser Mauricio Claver-Carone described him as a “key ally” in keeping Venezuelan crude flowing to international markets. With the new contracts, the Associated Press reports, NABEP is already the second-largest operator in Venezuela, behind Chevron — a ranking The Rio Times detailed on Monday, when the White House fact sheet set out the 100-year lease over 17 fields holding about 65 billion barrels, a 35 percent US equity stake in NABEP’s parent, a guaranteed 20 percent of output at production cost and first refusal on the rest.

China protests as its fields change hands

Of the 14 contracts newly granted to NABEP, several fields were previously controlled by five Chinese companies and a Russian firm, two US officials told Reuters. Projects involving Sinopec, China National Petroleum Corp. and China Concord Resources are among those changing hands, in what the White House openly casts as a reassertion of the Monroe Doctrine — pushing Chinese and Russian interests out of the hemisphere’s energy sector.

Beijing’s response came Tuesday. “China’s legitimate rights and interests in Venezuela must be safeguarded,” Foreign Ministry spokesman Guo Jiakun said, according to the state-run Global Times, adding that cooperation between Beijing and Caracas is protected by international law and the laws of both countries. The statement stops short of announcing retaliation, but it puts the expropriation question — who compensates Chinese firms for fields they developed under contracts signed with the Maduro government — formally on the table.

OPEC membership is “up to them,” Trump says

Asked on Monday whether Venezuela should remain in OPEC, Trump was dismissive: it is “up to them what to do about OPEC,” he told reporters. Bloomberg had reported days earlier that Caracas is actively weighing an exit from the cartel it helped found in 1960, an idea raised in conversations with US officials, though no final decision has been made.

An exit would have limited immediate market impact — Venezuela produces around 1.1 to 1.25 million barrels a day and has effectively operated outside OPEC’s quota system for years — but the symbolism would be large: a founding member walking away months after the United Arab Emirates quit the group in May, and doing so as Washington takes a 35 percent stake in the vehicle controlling its biggest fields. Staying, by contrast, keeps Caracas a seat at a table that still includes Saudi Arabia, Iraq and Iran.

Skeptics question the math and the mechanics

The deal’s critics span economics and law. Nobel laureate Paul Krugman has dismissed the administration’s Venezuela oil projections as unrealistic fantasy, arguing that the touted reserves vastly overstate what can profitably be produced. Lawyers and energy scholars point to an unresolved structural problem: the Pentagon’s Office of Strategic Capital, named as the vehicle for the 35 percent US stake, has no statutory authority to hold equity in private companies, chief spokesman Sean Parnell told Reuters — leaving unclear which government entity would actually hold the warrants.

“If the goal was to try to reduce the risk of investing in Venezuela, the United States might be doing the exact opposite with this transaction: further weakening the country’s already fragile institutional framework,” said Luisa Palacios of Columbia University’s Center on Global Energy Policy. The oil majors, for their part, are in no rush: Reuters reports that despite Trump’s announcement that ExxonMobil and others are “going in,” the largest companies remain hesitant to commit capital to a country with high political and legal risk. Interim President Delcy Rodríguez says the pact will run at least 25 years under the new Hydrocarbons Law, securing US$100 billion in investment and US$209.3 billion in royalties and taxes — about US$19 per barrel left in Venezuelan hands.

Flights resume, and Colombia’s richest family circles

The commercial thaw is moving faster than the legal one. Simón Bolívar International Airport in Maiquetía, which serves Caracas, reopened to commercial flights on Tuesday, two months after twin earthquakes shut it down. American Airlines restores daily nonstop Miami–Caracas service on Thursday, United has announced a Houston–Caracas route, and Aeroméxico plans Mexico City flights from October, subject to government approval.

Capital is scouting the opening too. The group of Jaime Gilinski Bacal — ranked by Forbes as Colombia’s richest person, with a fortune of US$14.7 billion — bought a 20 percent stake in GeoPark for about US$107 million in March and said at the time that Venezuela “may warrant renewed review and prioritization” as a “strategic opportunity for GeoPark.” The independent producer, long active in Colombia, Chile and Ecuador, is now widely read as the Gilinski group’s vehicle for an eventual entry across the border.

What it means for Latin America

The region is watching a redrawing of its energy map in real time. If NABEP delivers even part of its planned US$100 billion build-out, Venezuela’s output climbs from today’s roughly 1.1 million barrels a day toward volumes that compete directly with Colombia, Ecuador and Brazil for refinery space on the US Gulf Coast. For Beijing, the dispute over five companies’ lost fields becomes a test case for how far Washington’s Monroe Doctrine revival will go — and for Caracas, the OPEC decision now openly on the table is the last lever of energy diplomacy it still fully controls.

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Sources: Reuters; Associated Press; Bloomberg; Anadolu Agency/Global Times; Voz Media; Oil & Gas 360; Bilyonaryo; AirlineGeeks; Simple Flying; BNamericas; Forbes; The Hill; White House fact sheet.

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