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

Sources familiar with the matter said that the unprecedented deal between the U.S. and Venezuela to gain access to a quarter of Venezuela's reserves and the role played by a Venezuelan businessman has caused some oil companies to hesitate and ask questions about their potential investment in the country.

In a White House factsheet released late on Monday, it was revealed that private oil company North American Blue Energy Partners would be granted a lease of 100 years for 17 oilfields located in Venezuela. These oilfields contain 65 billion barrels worth of oil. 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 was not charged. He previously denied the allegations.

A person who was involved in the preparations for a week-long event that is expected to sign energy contracts said, "Oil companies and large foreign companies are concerned about being seated next to Betancourt."

NABEP did not respond immediately to an inquiry for comment on this story. The company produces 170,000 barrels of crude oil per day. Betancourt stated in an email company statement that after the White House announced the details of the agreement that 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 sector for over 15 years and has a track record of consistent success. He was most recently at the helm NABEP where he quickly scaled up the production of the company. It added that it has an immediate goal to increase production to "more than one million barrels per day."

Some may be more cautious. This illustrates the uphill battle that President Donald Trump has to fight 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 and compliance with the rule of law.

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 "add more obstacles" to Trump's plan to increase Venezuela's oil production and exports in order to boost U.S. reserve.

He said that you would need a large investment from companies like ConocoPhillips and Exxon. How do you attract these companies to the country?

Radhika Bansal is a senior vice-president at Rystad, and she said in an earlier interview on Monday that there were still many unknowns.

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 in connection with major offshore gas projects 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 negotiations to migrate existing contracts to new terms that were authorized by a comprehensive energy reform. This reform also encourages the expansion of projects.

Chevron is looking to add a new block to its portfolio in the vast Orinoco Belt. It also wants to negotiate a Monagas North area that could be used as diluents to dilute its extra-heavy crude oil.

(source: Reuters)