US energy secretary vows oil output will double on visit to Venezuela

The Biden administration's deal with a Venezuelan oil company has piqued the curiosity of the obscure Pentagon office responsible for managing strategic capital investments. Known as the Office of Strategic Capital (OSC), this little-known department was originally established to provide loans for critical technologies vital to national security.

However, the current administration has expanded the OSC's remit to include equity stakes in private firms, a move that has drawn scrutiny from Democrats and Republican lawmakers alike.

The OSC announced this week that it would acquire a 35% stake in North American Blue Energy Partners, a company headed by Venezuelan investor Alejandro Betancourt López. The deal was announced by the White House, which claimed that the OSC had the legal authority to take equity stakes in private companies, citing a statute created during the Biden administration.

However, this assertion has been met with skepticism, as a Pentagon spokesperson initially told reporters that the office "does not take equity stakes" in private companies due to its limited authority.

Critics argue that the OSC's decision to venture into the oil sector, rather than focusing on critical technologies, raises legal and ethical questions. A former OSC official told Semafor that while taking stakes "was never the intention when setting up OSC," the deal still "raises some legitimate legal and ethical questions." The administration's decision to push ahead with the deal, despite its unorthodox nature, may be based on the assumption that no one will challenge it, given the potential profit opportunities for US investors in Venezuela's oil market.

The OSC's director, David Lorch, previously worked for the private equity firm Cerberus Capital Management, founded by Deputy Defense Secretary Steve Feinberg. The recent tax bill, which boosted the OSC's loan authority from $1 billion to $200 billion, has enabled the office to expand its financial reach. However, the Venezuelan deal may be seen as an attempt to further stretch the office's mandate and could potentially face legal challenges if Democrats retake the White House in November.

The OSC's recent success in reinvigorating US oil companies in Venezuela, including a recent agreement with Chevron, suggests that the administration's strategy may be working. However, the deal's long-term impact on free elections in Venezuela remains unclear. Republican lawmakers, allied with opposition leader María Corina Machado, have called for a faster transition to free elections, regardless of the deal's outcome.