What happened: President Trump announced on Friday that his administration had entered into a deal with Venezuela that could have a profound impact on America’s oil reserves and energy capacities. The agreement grants the US a 35 percent stake in the North American Blue Energy Partners, along with the chance to purchase 20 percent of the oil it produces at cost. However, there are reasons to suspect the deal may not be as straightforward as it seems.

Why it matters: Energy independence has been one of the president’s primary concerns since returning to office, and this agreement could further insulate the United States from oil production in the Middle East and elsewhere. However, it also ties the country to Venezuela to an extent that could create new problems in the future. The specific text of the agreement, which has not been released, could decide which fate is more likely.

The backstory: What do we know about the deal?

On Friday, President Trump announced that the United States and Venezuela had agreed to a deal that could potentially open up as much as 65 billion barrels of oil reserves to the US markets. In the days since, more information has continued to emerge about the specifics of that agreement, though the exact text has yet to be released. Still, what we do know is at least interesting and has the potential to be a boon to both Americans and Venezuelans:

• The North American Blue Energy Partners (NABEP) will gain exclusive access to seventeen oil fields with known reserves of roughly 65 billion barrels, which are thought to be capable of producing more than 1.5 million barrels of oil per day. In return, NABEP has promised to invest at least $100 billion in developing those oil fields.
• Venezuela currently controls more than 300 billion barrels of oil reserves, yet produces around 1.25 million barrels per day nationwide. As such, the output from NABEP would mark a dramatic improvement once the sites are up and running. Venezuelan President Delcy Rodriguez projects the agreement could generate $209 billion in revenue for the country, with roughly $19 per barrel going back to Venezuela.
• The Department of Defense’s Office of Strategic Capital (OSC) will take a 35 percent equity stake in NABEP as part of the deal, alongside veto power over the appointment of its board of directors.
• NABEP will grant the United States 20 percent of “all current and future fields NABEP will operate” at cost, along with the right of first refusal for the remaining 80 percent at market value.
• Gulf Coast refineries are also set to benefit from the agreement, as they are designed to process the type of heavy crude oil Venezuela produces. Up to now, those refineries have relied mostly on heavy crude from Canada and Mexico, with some from Venezuela, since the United States produces lighter shale crude.

Ultimately, most of that sounds like it will work out well for all parties involved. Until the signed and completed version of the deal is presented, though, most of what has been reported should be taken with at least some hesitation.

Lingering questions

One of the most important elements of this deal that, as of this writing, needs further clarification is the timeframe in which the US could begin to see that 20 percent. It will be years before the new oil fields are running at capacity, but the White House fact sheet claims that their agreement with NABEP extends to all of their current and future fields. The company currently pumps about 200,000 barrels a day from its other locations, which could potentially grant the administration access to 40,000 barrels a day at cost.

However, there has been little mention of such immediate access to this point, which is why seeing the final language is so important.

Beyond those details, though, some are uncomfortable with the idea of the government taking equity stakes—particularly in such a large proportion—in private companies. The rise of socialism on the political left is a growing problem, but the government making these kinds of deals is a form of socialism as well. And should the agreement result in the energy and economic windfalls that many expect—which, to be clear, would be a boon for the country in many ways—it could pave the way for similar deals in the future as well.

Lastly, the legality of the deal itself, for both the United States and Venezuela, is a concern. Article 12 of the Venezuelan constitution prevents the government from allowing foreign entities to own the country’s oil resources. While some of those codes have been relaxed in recent years, there is a fear that a post-Rodriguez government could use that stipulation to invalidate the deal after much of the investment to get the oil fields up and running has already been made.

On the American side, the OSC is allowed to invest in critical technologies and resources across thirty-four “covered technology categories,” but oil is not one of them. Consequently, the extent to which the Department of Defense is legally permitted to enter into this agreement is unclear and will likely depend on the details of exactly how they acquired their stake in NABEP. It’s possible that everything is legal and the deal can go forward unhindered, but we can’t know for sure until the final details are released.

Despite the risks and lingering questions, though, one of the most promising aspects of the deal has little to do with the parties directly involved.

Oil companies change their mind

Shortly after the United States removed Nicolás Maduro from power back in January, President Trump promised that “The oil companies are going to go in. They’re going to spend money. We’re going to take back the oil that, frankly, we should have taken back a long time ago.” However, that didn’t happen.

Darren Woods, the CEO of ExxonMobil, spoke for many in the industry back then when he concluded that Venezuela was simply “un-investable.” The risks were too great to put in the time, effort, and resources required to get the oil industry off the ground again. And, as recently as a month ago, the companies and the Venezuelan government remained at an impasse.

But now, the situation looks a good bit different.

It’s unclear how much, if any, notice Chevron, ExxonMobil, and others had regarding the recent deal between the Trump administration and the Venezuelan government, but they now appear poised to invest billions back into the country once again. And the agreements to do so could be finalized as soon as this week.

Given that their primary concern had long been that the country was simply too unstable and unpredictable to risk that level of investment, seeing the US government take the first step likely prompted them to follow suit. So while, once again, we need to see the details before we can know with any degree of confidence how this situation will turn out, there is reason for hope that did not exist a month ago. And this final reason why is relevant beyond the oil fields of Venezuela as well.

Spiritual application: “Be imitators of me, as I am of Christ”

In Paul’s first letter to the church at Corinth, he concludes a passage about prioritizing your witness to others over your own rights and seeking God’s glory by writing “Be imitators of me, as I am of Christ” (1 Corinthians 11:1). The apostle understood how difficult it would be for the Christians in Corinth—many of whom were converts from Roman religion rather than Judaism—to set aside the comforts they’d grown up with in order to foster a closer community of believers. Those kinds of difficult decisions get just a bit easier when you can see someone else do it first, though.

I am in no way intending to compare President Trump with the apostle Paul, but the basic notion that sometimes hard decisions get easier when we know we’re not the only ones making them is a crucial part of why God intends for us to live out our faith in community with other believers. But it’s important to note that he recognized he was worth imitating only to the extent that he imitated Jesus.

Paul was very aware that he did not always live up to that standard (Romans 7:15–20). He never stopped trying, though, and that’s the key.

Our goal as followers of Jesus should be to live in such a way that every aspect of our lives can serve as an example to others. And we need to be humble enough to admit when that’s not the case.

So, which parts of your life would draw someone closer to Christ if they imitated you? Where do you need to learn from the example of someone else?

Take some time today to pray through both questions. And, as you do, ask the Holy Spirit to help you guard against the false humility that would deny your areas of strength while filling you with the genuine humility required to recognize your areas of weakness.

Understanding both is essential to following Christ well and helping others to do the same.

 

 

Denison Forum