How the Pentagon Is Getting Into the Venezuelan Oil Business Under Trump

As the United States grappled with gaps in its defense‑manufacturing capabilities, the Pentagon created a new office dedicated to encouraging investments that would strengthen military production.

Launched in 2022 during the Biden administration to address defense‑industrial weaknesses, the initiative has recently shifted toward a pivotal energy project when President Trump unveiled a partnership with Venezuela last Friday.

Reportedly operated by the Office of Strategic Capital—reported to Deputy Secretary of Defense Stephen A. Feinberg, himself a former defence adviser and Trump appointee—the entity has focused on collaborating with a private oil producer headed by Alejandro Betancourt López, a highly influential figure in global energy trade.

According to the President, defence secretary Pete Hegseth and Secretary of State Marco Rubio finalised an accord with the Venezuelan government to secure billions of barrels of oil reserves through integration partnerships with private industry.

The transaction allows the United States to acquire up to a 35 percent stake in North American Blue Energy Partners, the parent of Betancourt’s firm, realized chiefly as warrants coupled with preferential access to the company’s oil output.

Warrant instruments, described internally as “penny warrants,” grant the government the ability to purchase shares at fixed prices; their market value adjusts closely to the issuing company’s fundamentals.

By comparison, during the COVID‑19 surge the Treasury raised funds using airline warrants procured from lenders—a precedent underscored by recent auctions showing how such arrangements function to stabilize public‑sector loss management.

Unlike typical subsidy packages, this deal is presented as “zero‑cost” to the United States, implying lower repayment burdens for the host enterprise while offering greater investor liquidity prospects and potential protection from political volatility in Caracas.

Leadership resides in David Lorch, formerly senior at Cerberus Capital Management—a private‑equity vehicle co‑founded by Feinberg—who assumed the Director role in November.

In that inaugural month the Office committed $620 million to Vulcan Elements and $80 million to ReElement Technologies, facilities designed to expand magnet production and buttress critical mineral supply networks.

Financial scrutiny mounted when Vulcan Elements exhibited ties to the Trump family, prompting legislators from one party to voice disapproval; Petri Navarro, a White House aide and personal ally to the younger President, openly advocated for the financing, per reporting from ProPublica.

Operational safeguards highlight the Office’s stance: spokespeople affirmed that it “does not acquire equity stakes” in private ventures, a position repeatedly contradicted by the administration’s Monday clarification.

Contractual terms stipulate that the beneficiary will receive twenty percent of oil production at cost, while the State Department retains priority rights to acquire the remaining eighty percent.

Such a framework distinguishes State Department involvement, a role customary only in commodity swaps normally governed by Energy Department protocols or Congressional oversight.

Realistically, large‑scale extraction in Venezuela will face protracted timelines before any measurable output materializes.

Background on Alejandro Betancourt notes a career bridging Venezuelan asset development, subject to investigations in Spain and Switzerland alleging money‑laundering and fiscal irregularities, and restricted from foreign travel pending extradition hearings in Switzerland.

Meanwhile, Secretary of State Marco Rubio pursued direct dialogue, urging European consulates to relax constraints on the individual’s movements to facilitate negotiations.

“Mr. Betancourt has never been charged with a criminal offense,” asserts Sarah Chouraqui, General Counsel of North American Blue Energy Partners, in a statement issued Saturday.

Kate Kelly supplied supporting investigative contributions.