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“Rainmaker” Involved In Barter Royalty-In-Kind Program

A little-known New York trading company, Free Market Petroleum (of which Jack Kemp is a board member), is working with the Venezuelan government oil monopoly PdVSA, and the U.S. Department of Energy as a middle man and facilitator, to bring 54 million barrels of crude to the U.S. Strategic Petroleum Reserve.

The Department of Energy reports that the Strategic Reserve doesn’t directly purchase crude oil to deposit in the reserve, located in old salt mines in Louisiana and Texas.

Rather, the department receives oil in lieu of royalty payments which are owed to the U.S. government on offshore oil leases in federally controlled waters. In short, oil is bartered to the government for royalty payments.

To consummate the deal, it now looks like Free Market Petroleum will need to sell some of its Venezuelan oil to other U.S. oil companies, and then those companies would deposit the same oil into the Reserve to pay off the royalties owed to Uncle Sam.