U.S. officials defend deal with controversial Venezuelan oil baron

U.S. officials are defending their work with Venezuelan businessman Alejandro Betancourt in the unprecedented White House move to effectively gain control over huge oilfields in the country.

Why it matters: Betancourt is the colorful and controversial figure who heads North American Blue Energy Partners (NABEP), the oil company partnering with the administration in the agreement that gives the U.S. preferential access to output from 17 major fields.

• The Pentagon's Office of Strategic Capital is taking a 35% equity stake in the company.
• The U.S. also has the rights to buy 20% of the oil at cost after the company pays its taxes to Venezuela.

Driving the news: At a briefing with reporters Tuesday, a U.S. official talked up Betancourt as a "proven operator" in the country's oil sector that has been vetted by the administration.

• The official also bluntly acknowledged the realpolitik in the effort to boost output in the country, which has vast reserves but modest oil production after years of mismanagement and underinvestment.

"There's a reality here, okay, and that is that not just here, but in other parts of the world, you have to deal with the dynamics sometimes that are in place in order to get to where you want to get to," the official said.

• "I'm being blunt: we make choices like this all over the world."
• "Geopolitics is often not the choice between the ideal and the imperfect. It is often, you're trying to navigate what's the best outcome, and you have to work with the factors that you have in place."
• In prior conversations with Axios, two other senior administration officials acknowledged the troubles Betancourt has faced, but said they were worth the risk.

Catch up quick: Betancourt, 46, is the linchpin to Trump's plan to increase U.S. access to oil and strengthen its dominance in the hemisphere, which became clear after the Jan. 3 removal of Venezuelan strongman Nicolas Maduro.

• His ties to the first Trump administration, anti-Maduro activity in 2019 and his help in the U.S. coup against Maduro made him the ideal partner for the administration, Axios reported.
• "I'm not nominating anyone for sainthood here. What I am telling you is that this is a person that, in the past, has been helpful to the United States government," the official said.
• And "there are no charges he's facing in the United States for violation of any of our laws."

Catch up quick: In 2018, Betancourt was listed as an unnamed "conspirator" in a federal indictment of his cousin and seven others in a $1.2 billion international money-laundering scheme involving manipulated currency exchange rates between U.S. dollars and Venezuelan bolivars.

• Betancourt was never charged in the crimes, which largely occurred between 2014 and 2016, because his attorneys successfully argued he was unaware of the scheme.
• The crime involved Venezuela's state-run oil company PDVSA, properties in Miami and bank accounts in Switzerland, where authorities inexplicably revived the case last year, raided Betancourt's castle in Spain and left the billionaire stuck in his home country of the U.K. as he fought extradition.
• This spring, as Trump needed Betancourt for the deal, U.S. officials interceded on his behalf with Swiss authorities, the Washington Post first reported. (U.S. officials dispute the reporting that the Swiss sent an arrest request to the U.S.)

Ultimately, Swiss officials acknowledged the case was in its early stages and that they didn't have enough to proceed, thereby restoring his passport in the U.K., which allowed Betancourt to travel to Caracas and D.C. to complete the deal.

Yes, but: The unusual agreement to expand output in Venezuela is facing questions about its legality, durability, and whether it's a form of neo-colonialism.

• Jason Bordoff, founding director of Columbia University's Center on Global Energy Policy, said the oil agreement appears to have inconsistencies with Venezuelan law, which U.S. officials deny.
• Washington "appears to be engineering something like a pseudo-national oil company," he wrote on X, adding the U.S. offtake rights, control of the new entities' board and other facets of the deal "echo British control over Persian oil a century ago."

The big picture: U.S. officials say the deal will bring the capital and expertise to develop the Venezuelan oil sector for the benefit of the country's people, in contrast with the prior regime.

• It's also part of wider competition with U.S. adversaries, Trump officials argue.
• "Do we want Russia and Chinese companies controlling the the wealth of a country in our hemisphere, or do we want the United States, in combination and partnership with the Venezuelan people, having influence over those resources so that they benefit the Venezuelan people, which is in our interest?" the official said.

The intrigue: Betancourt rocketed to fame and infamy over lucrative Venezuelan power-plant construction contracts won by his company, Derwick Associates, in Venezuela between 2008 and 2011.

• In 2013, former U.S. Ambassador to Venezuela Otto Reich sued Betancourt in federal court in New York for alleged kickbacks and other corrupt activity. Reich also accused Betancourt of defaming him and harming his consulting business.
• The next year, New York federal prosecutors opened an investigation into Derwick.

What they are saying: Betancourt, his attorneys and spokespeople have denied wrongdoing and created a 19-page rebuttal to the accusations over Derwick that have dogged him to this day.

• "No prosecutor in any jurisdiction has indicted Derwick Associates or its principals," the document says. "No court anywhere has entered a finding that the company paid a bribe, rigged a tender, or overbilled a contract."

What's next: Chevron is expected to announce a major expansion of its operations in Venezuela tomorrow.