The NYT says Chevron’s involvement is separate from Trump’s deal with our new Venezuelan partner. Chevron, of course, will be relying on our political clout in Caracas to protect its investments from nationalists, so the deals are not completely separate. Nevertheless, while you can certainly question both the morality and the political wisdom of providing cover for Chevron, the plan at least makes sense for Chevron’s shareholders.
Without Chevron’s involvement in the joint venture, I have the following questions about the deal:
- Our new partner is a relatively minor player without either the expertise or the financial wherewithal to make the massive improvements that will be required to make the venture a success. Where is the money coming from? Would you lend billions of dollars under these circumstances to the partner without, at a minimum, a guarantee from the US government? I think not, which would mean that the American taxpayer is ultimately funding the enterprise.
- Using the oil obtained through the joint venture to refill the strategic reserve is logical. However, I have read that the chemical composition of Venezuelan oil makes that impractical, and in any event, the oil purchases would likely exceed the capacity of the reserve. What, then, are we going to do with the oil? Sell it to Chevron? If that is the plan, why not just leave the entire business to Chevron and keep the US government out of it?