Late summer handed the oil market something it hadn't seen in decades. Washington and Caracas signed an energy agreement that can seriously change the balance of power in the global oil market. In practice, its implications stretch far beyond production figures and corporate profits. It could reshape who has influence over Venezuelan oil, weaken the position of China and Russia, and give Washington a new source of leverage in a global market already being strained by wars, sanctions and insecure shipping routes.

At the heart of the agreement is a long-term development plan involving North American Blue Energy Partners (NABEP), which has reportedly been granted a 100-year framework to develop 17 Venezuelan oil fields. The Venezuelan government expects these projects to generate more than $209 billion in tax revenues, while private operators are expected to play a major role in increasing production.

What Washington gets:

The terms secured by the US side are unusual even by the standards of major international oil agreements.

The Pentagon’s Office of Strategic Capital receives a 35% stake in NABEP’s parent company;

The US State Department is guaranteed the right to purchase 20% of total production at the cost of production;

For the remaining 80% of output, the United States receives the right of first refusal;

The US side has veto power over the appointment of board members;

A majority of the board members must be US citizens.

This........

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