Sources say that Trump's oil agreement with Venezuela raises concerns for some major producers.

Sources familiar with the situation said that the unprecedented deal between the U.S. and Venezuela to access a fifth of the country's oil reserves, and the role played by a Venezuelan businessman in this deal, has caused some oil companies to hesitate and ask questions when evaluating their?potential investment?.

In a White House factsheet released late Monday, the White House outlined an arrangement whereby private oil company North American Blue Energy Partners would be granted a lease of 100 years for 17 oilfields located in Venezuela that hold 65 billion barrels worth of oil reserves. The U.S. will take a 35% equity stake in the corporate parent company, receive a guaranteed 20% of the oil production and hold a right-of-first-refusal to purchase all of the remaining output.

NABEP's control is held by Alejandro Betancourt. He has been investigated by U.S. authorities and European authorities for past dealings with Venezuelan officials, but he has never been charged. He previously denied the allegations.

Oil majors and large foreign companies that are negotiating contract migrations do not want to be at the same table as Betancourt, said a participant in preparations for a week-long event where contracts on energy will be signed.

NABEP did not respond immediately to an inquiry for comment on this article. The company produces 170,000 barrels a day. Betancourt stated in an email company statement that after the White House revealed details of the agreement, the transaction will "unleash this potential to the benefit of both Venezuelans as well as Americans."

The company stated that Mr. Betancourt had been working in the Venezuelan Oil Industry for over 15 years, and had a track record of consistent success. He was most recently the CEO of NABEP where he quickly scaled up the production of the company. It added that it aims to increase production in the near future, with the goal of reaching more than 1 million barrels per day.

Some may be more cautious. This illustrates the uphill battle that President Donald Trump will face to convince the major U.S. Oil Companies, particularly ExxonMobil, and ConocoPhillips, to invest and expand Venezuela's oil production.

Both companies left Venezuela after their assets had been nationalized by former President Hugo Chavez's government. They have both repeatedly stated that they have not met their requirements for legal certainty and contract integrity to enter the country.

Trump said to reporters Monday that Exxon is one of the companies heading into Venezuela. He did not elaborate.

ExxonMobil refused to comment on Trump's remarks. ConocoPhillips' spokesperson referred back to an earlier statement which stated that any investment decisions would be guided by several factors, including policy stability.

U.S. GOVERNMENT MAY BECOME A COMPETITOR

Sources said that the planned structure of NABEP and the assets it could accumulate in Venezuela could lead to American oil companies facing competition in Venezuela from the U.S. Government itself.

Alejo Czerwonko is the chief investment officer for emerging markets at UBS. He said that this could create a'more significant obstacle' to Trump's plan to increase Venezuela's oil production and exports in order to boost U.S. reserve.

He said: "You would need a sizable amount of investment and expertise from companies like Exxon or ConocoPhillips." How do you attract these companies to the country?

Radhika Bansal said in an earlier interview on Monday, before the White House released details of the agreement, that there were still many unknowns and confusions.

Nevertheless, there are some deals that get done.

According to reports on Monday, Chevron, the largest U.S. producer of oil in Venezuela, and the only one that has never left the country, is on track to sign an agreement for energy projects in Venezuela next week.

These deals and others, such as the licenses granted recently to Shell and BP for major offshore projects in gas, are separate from?U.S. The NABEP venture is separate from the?U.S.

Since the beginning of this year, dozens of companies have been in talks to migrate existing contracts to new terms that were authorized by a comprehensive energy reform in Venezuela. This reform also encourages the expansion of projects.

Chevron aims to add at the very least one block to its portfolio in the vast Orinoco Belt and is also looking to negotiate a Monagas North area that could be used as a diluent for its extra heavy oil output.

(source: Reuters)