US Structured Venezuela Oil Stake to Guard Against Future Dilution, Official Says

The US government designed its 35% stake in a major Venezuelan oil venture using a specialized warrant structure aimed at protecting Washington’s ownership from being diluted as the project raises additional capital, according to a senior official. The arrangement gives the US the right, but not the obligation, to purchase equity later at a minimal price, allowing the government to maintain its full ownership percentage once the project reaches mature production levels.

The venture, granted extensive long-term rights to a group of Venezuelan oilfields holding substantial reserves, was awarded without a competitive bidding process as part of a broader effort to revitalize the country’s oil sector following a change in Venezuelan leadership earlier this year.

Structure Provides Immediate Benefits Without Upfront Investment

According to the official, this approach allows the US government to receive dividend benefits immediately, similar to a traditional equity holder, while avoiding the financial exposure typically associated with funding large-scale offshore development. The warrant mechanism specifically shields the US position from being diminished as the company seeks billions of dollars in additional capital needed to expand production.

Separately, the US military maintains a right to purchase a portion of the venture’s future oil output at production cost rather than market rates, with the remaining output available for purchase at standard market pricing.

Deal Faces Scrutiny Over Business Ties

The arrangement has drawn attention due to past business dealings involving the Venezuelan businessman overseeing the venture, though he has not faced formal charges and denies any wrongdoing. Additional safeguards have also been put in place requiring officials with past ties to a private equity firm unrelated to the deal to recuse themselves from related decisions, redirecting such matters to other government officials for review.