The US government has structured its 35% stake in a Venezuelan oil venture through warrants to prevent its ownership from being diluted as the project raises funds, according to Reuters.

On August 30, the US planned to acquire a 35% passive stake in North American Blue Energy Partners, alongside preferential rights to buy 20% of its oil output at cost.

The Pentagon holds “penny warrants” in North American Blue Energy Partners (NABEP), giving Washington the right to acquire the stake at a token price at a later stage. The structure also allows the US to receive dividends before exercising the warrants.

NABEP, controlled by Venezuelan businessman Alejandro Betancourt, holds 100-year rights to 17 oil fields estimated to contain around 65 billion barrels of reserves under a recent agreement between Washington and Caracas.

The US official said the warrants are intended to preserve the government’s 35% ownership as the company secures funding needed to develop the fields.

The Pentagon also has a separate right of first offer to purchase 20% of NABEP’s oil output at production cost, while the remaining output would be purchased at market prices.

The agreement has faced scrutiny over Betancourt’s past business dealings. Meanwhile, Venezuela’s oil production currently stands at around 1.1 million-1.2 million barrels per day (mmbl/d), well below its peak of more than 3 mmbbl/d in the late 1990s.