Top Senate Democrats Challenge Legality Of Pentagon’s Planned Venezuela Oil Stake

Four top Senate Democrats are challenging whether the Pentagon has the legal authority to take a 35 percent stake in a Venezuelan oil producer.

Democratic Sens. Jeanne Shaheen of New Hampshire, Jack Reed of Rhode Island, Martin Heinrich of New Mexico and Elizabeth Warren of Massachusetts sent a letter Wednesday to Secretary of State Marco Rubio, Secretary of War Pete Hegseth and Energy Secretary Chris Wright, according to a Thursday release from Shaheen’s Senate Foreign Relations Committee office.

“The statute creating the Department of Defense’s Office of Strategic Capital does not explicitly provide authority to take equity stakes in private oil companies,” the senators wrote in the letter.

The office is authorized to issue and guarantee loans to private U.S. companies that develop critical technologies and strengthen the defense industrial base, the senators said, adding, “This deal is inconsistent with that authority.”

Tad DeHaven, a policy analyst at the libertarian Cato Institute, said in a statement to the Daily Caller News Foundation that “Congress hasn’t expressly authorized OSC to take equity stakes, and the administration still owes us a clear legal explanation.”

“As with Intel and MP Materials, Washington is picking a corporate favorite and becoming its business partner,” DeHaven added. “In this case, protecting that company could also shape U.S. policy toward Venezuela.”

“The proposed agreement is unlikely to reduce high energy costs for Americans, and it risks undermining the Venezuelan people’s transition away from a dictatorship,” the senators wrote.

A Department of War official said on background in a statement to the DCNF that, as with all congressional correspondence, the department will respond directly to the letter’s authors.

The State Department, the Energy Department, North American Blue Energy Partners (NABEP) and the offices of Shaheen, Reed, Heinrich, Warren and Republican Kentucky Sen. Rand Paul did not immediately respond to the DCNF’s requests for comment.

The office of Republican Kentucky Rep. Thomas Massie did not provide a comment on the record to the DCNF at the time of publication.

The four senators are the top Democrats on the Senate Foreign Relations, Armed Services, Banking, and Energy and Natural Resources committees, respectively.

Under the deal, NABEP, the second-largest private Venezuelan oil producer, has granted the Office of Strategic Capital a 35 percent equity stake in its corporate parent at no cost to taxpayers, according to a White House fact sheet.

Venezuela’s interim authorities granted NABEP 100-year concessions for 17 oil fields with about 65 billion barrels of proven reserves, according to the fact sheet. Russian or Chinese companies previously controlled many of those fields, The Associated Press reported.

President Donald Trump called the agreement “the largest oil deal in history” in Sept. 22 remarks that the State Department posted on X the same day.

The White House said NABEP plans to invest up to $100 billion in new oil infrastructure in Venezuela, that the U.S. government can veto any appointment to the company’s board and that a majority of its board members must be U.S. citizens.

NABEP also granted the State Department the right to buy 20 percent of its output at production cost and the right of first refusal on the remaining 80 percent, according to the fact sheet. The White House said the oil could help refill the Strategic Petroleum Reserve. The reserve is at its lowest level since 1982, Quartz reported.

“These fields are going to be productive and generate royalties and revenues for the Venezuelan people, eventually through a democratically elected government,” Rubio said in remarks the State Department posted on X on Sept. 8.

The senators demanded the complete text of any agreements tied to the deal, the legal authorities behind it and the due diligence and vetting used to negotiate it.

They also asked whether any member of the Trump family, donors to his campaign or to other Trump family projects, or any past or present administration official stands to benefit financially from the arrangement.

The senators wrote that NABEP has operated for only two years and produces only 200,000 barrels of oil per day, “with no evidence that it has the operational and financial capacity to scale up and provide the billions in investments needed” to carry out the deal.

The letter calls NABEP owner Alejandro Betancourt “a Venezuelan oligarch under investigation for money laundering and tax evasion across multiple jurisdictions.”

Betancourt has never been charged, and Rubio has said he is not under active investigation in the U.S., Quartz reported.

Energy analyst David Blackmon wrote Thursday on his Substack that the senators’ argument “does not survive contact with its own premise.”

The Cato analyst said calling the stake “free” does not mean taxpayers are off the hook, “especially when we haven’t seen the agreements.”

“Competing oil producers also have to worry that Washington will favor its own company, and private investors will take that into account when deciding which businesses to back,” DeHaven noted. “The government can make money on its favored company while making the rest of the economy worse off.”

Asked Aug. 31 when gas prices would fall, Trump said ‘it could be a little bit” and brushed aside analysts’ forecasts of a yearslong wait, the AP reported.

House Democrats sent the administration a similar letter, but as the minority party, Democrats lack subpoena power and cannot call hearings, Quartz reported.

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