The Math Behind the 'Free' Venezuelan Oil: Zero Dollars Up Front, $30 a Barrel at Cost, and Tankers Bound for Corpus Christi
The president called it a gift. The producer first called it a purchase, then agreed it was free. CNN's read of the deal shows how both were telling the truth - and why the discount, not the first cargo, is the real story.
CORPUS CHRISTI - President Donald Trump announced the deal on his way to a Texas rally on Tuesday: Venezuela, he told reporters, had sent 'as a gift a boatload of a million barrels of oil' for the United States, at no cost to the taxpayer. The producer of that oil, North American Blue Energy Partners, had initially described the same cargo differently - as a purchase by the United States at a substantially reduced price. After the president spoke, NABEP amended its statement to match him: the first million barrels would arrive at a Texas port 'at no cost to the U.S. taxpayer.'
CNN's examination of the arrangement shows how both versions can be true. Under an August agreement the White House called the biggest oil deal in world history - in which the Pentagon took an equity stake in the company that owns NABEP, the second-largest private oil producer in Venezuela - the State Department holds the right to buy the first 20 percent of NABEP's production at $30 a barrel, the cost of production. The first million barrels were delivered with no up-front payment at all; their value, a person familiar with the terms told CNN, 'is settled through adjustments to future offtake pricing' - a later million barrels priced at $60, for example, would average the two cargoes to $30.
The deeper discount is structural. Venezuelan crude sells for around $80 a barrel on the open market, so even the averaged $30 price delivers oil to the United States far below what it could fetch elsewhere. A White House spokesperson acknowledged to CNN that only the first shipment comes at no cost. The administration argues the deal supports Venezuelan jobs and that without foreign investment the country cannot exploit its reserves, which have fallen from more than 3 million barrels a day in the 1990s to about 1.2 million.
Critics see the opacity as the problem. 'President Trump has purposefully covered up the details of his Venezuela oil scheme,' Illinois Rep. Dan Casten told CNN. 'We still don't know exactly how much money is involved or where that money is going.' What is known in Texas is narrower and concrete: the joint venture's first proceeds arrive on two tankers in Corpus Christi, the port where the president pointed at a ship on Tuesday and said, 'To the victor belong the spoils, right?'
