Four prominent Senate Democrats are questioning the Pentagon’s authority to acquire a 35 percent stake in a Venezuelan oil company.
Democratic Senators Jeanne Shaheen from New Hampshire, Jack Reed of Rhode Island, Martin Heinrich of New Mexico, and Elizabeth Warren of Massachusetts sent a letter on Wednesday to Secretary of State Marco Rubio, Secretary of War Pete Hegseth, and Energy Secretary Chris Wright, as noted in a release from Shaheen’s Foreign Relations Committee office on Thursday.
The senators emphasized in the letter that “the law establishing the Department of Defense’s Office of Strategic Capital does not provide explicit authority to take ownership stakes in private oil firms.”
They pointed out that while the office is empowered to issue and guarantee loans to U.S. companies focusing on critical technologies and bolstering the defense industry, “This transaction goes against that mandate.”
Tad DeHaven, a policy analyst at the Cato Institute, remarked to the Daily Caller News Foundation that “Congress hasn’t specifically authorized OSC to take equity stakes, and we still need a clear legal rationale from the administration.”
DeHaven also stated, “Much like with Intel and MP Materials, Washington seems to be choosing corporate favorites and becoming a business partner, which might influence U.S. policy regarding Venezuela.”
They expressed concerns that the agreement might not alleviate high energy prices for Americans and could endanger the Venezuelan population’s shift away from a dictatorship.
A source from the Department of War noted that, as is standard with congressional inquiries, the department intends to respond directly to the senators who wrote the letter.
As of now, the State Department, Energy Department, North American Blue Energy Partners (NABEP), along with the offices of Shaheen, Reed, Heinrich, Warren, and Republican Senator Rand Paul from Kentucky have not replied to requests for comments.
Additionally, Republican Representative Thomas Massie from Kentucky’s office did not offer any remarks to the DCNF when this was published.
These four senators lead the Senate Foreign Relations, Armed Services, Banking, and Energy and Natural Resources committees, respectively.
Under the proposed deal, NABEP, the second-largest private oil producer in Venezuela, has allowed the Office of Strategic Capital to acquire a 35 percent equity stake in its parent company at no cost to taxpayers, according to a White House briefing.
NABEP was granted 100-year concessions by Venezuela’s interim authorities for 17 oil fields, which hold approximately 65 billion barrels of proven reserves. Many of these fields were previously controlled by Russian or Chinese companies, as reported by the Associated Press.
President Donald Trump described the arrangement as “the largest oil deal in history” during comments on September 22, which the State Department shared on X.
The White House stated that NABEP aims to invest up to $100 billion into new oil infrastructure in Venezuela, with the U.S. government holding the power to veto any appointment to the company’s board, and requiring that a majority of board members be U.S. citizens.
NABEP has also permitted the State Department to purchase 20 percent of its output at production costs, along with having the first right of refusal on the remaining 80 percent, based on the fact sheet. The administration suggested that this oil could assist in refilling the Strategic Petroleum Reserve, which is currently at its lowest level since 1982.
Rubio indicated that these oil fields are expected to be productive, generating royalties and revenues for the Venezuelan populace, potentially through a government elected via democratic processes.
The senators demanded access to the entire text of any agreements linked to this transaction, clarification on the legal justifications for it, and the due diligence conducted during negotiations.
They also inquired whether any members of the Trump family, contributors to his campaign or other projects, or past or present officials within the administration would gain financially from this deal.
In their letter, they remarked that NABEP has only been operational for two years and is producing a mere 200,000 barrels of oil per day, “with no evidence suggesting it has the necessary operational and financial capability to scale up and provide the billions needed to implement the deal.”
NABEP’s owner, Alejandro Betancourt, was referenced as “a Venezuelan oligarch facing investigations for money laundering and tax evasion across various jurisdictions.” However, it’s important to note that Betancourt has not been criminally charged, and Rubio mentioned that he is not under active investigation in the U.S.
Energy analyst David Blackmon commented on his Substack that the senators’ argument “falls apart upon examination of its own premise.”
Similarly, DeHaven pointed out that just because the stake is labeled as “free” doesn’t exempt taxpayers from potential liabilities, especially absent of the actual agreements.
He further noted that competing oil producers might be anxious about the possibility of Washington showing favoritism towards its selected company, which private investors would likely consider when deciding where to invest.
When asked about the timeline for gas price reductions on August 31, Trump mentioned it might take “a little bit,” dismissing analysts’ predictions of a protracted wait.
House Democrats also sent a comparable letter to the administration, yet as the minority party, they lack the power to issue subpoenas or summon hearings.
