Inside the Silicon Valley Plot to Annex Venezuela for Oil That America Can’t Afford

At two in the morning, Venezuelan time, on January 3 the lights went out across Caracas. Within hours, the geopolitical architecture of the Western Hemisphere had been violently rearranged.

Under cover of a cyber-induced blackout, the United States launched Operation Absolute Resolve – a massive, multi-domain military intervention that culminated in the extrajudicial capture and rendition of Venezuelan President Nicolás Maduro.

The White House has framed this as being a decisive law enforcement action against a “narco-terrorist” regime. President Donald Trump declared the US was now “in charge” of Venezuela, with Maduro jailed in New York. 

However, the players and financial interests behind the raid reveal something far more troubling. The move not only dovetails with longstanding Russian attempts, since 2017, to encourage Trump to consider annexing Venezuela, in return for allowing Russia to take control of Ukraine, further evidence unearthed by Byline Times also ties it to tech industry plans to turn a sovereign nation into a laboratory for Silicon Valley’s most radical experiment: the “Network State.”

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The ‘Network State’ Laboratory

The US fossil fuel industry spent some $445 million through the last election cycle to influence Donald Trump and US Congress, and donated $19 million to Trump’s inauguration ceremonies.

Yet the American shale boom which has buoyed the US economy for the last decade is inexorably slowing down. Industry insiders and even conventional forecasts acknowledge that US shale oil and gas production is likely to peak this decade, hitting a long plateau before a decline that steadily shaves off the traditional foundations of US prosperity.

Grabbing Venezuelan oil, at least on paper, compensates for this coming energy crisis – expanding the total fossil fuel resources, boosting oil stock prices and conveying to global markets that US oil majors are here to stay.

However, for pro-Trump Silicon Valley figures like Peter Thiel, Balaji Srinivasan, and Marc Andreessen, the annexation of Venezuela represents a business opportunity of a different kind.

They are proponents of what Srinivasan has branded the “Network State” – a movement seeking to fragment existing nations into proprietary, market-governed enclaves or “startup societies”. Venezuela, broken by sanctions and now decapitated by military force, offers the potential of being the ultimate tabula rasa.

The intellectual blueprint for this intervention began years ago.

Founder of the Charter Cities Institute Mark Lutter, who in 2018 received funding from the Thiel-backed Emergent Ventures for work “on charter cities and also an attempt to create a new charter city”, previously discussed authoring a white paper on Venezuela premised on a “transfer of power”. The paper was never released to the public. 

In a 2019 conversation Mark Lutter and 80,000 Hours podcast host Robert Wiblin talked about how to capitalise on the forcible removal of the Venezuelan Government. Speaking seven years before the US eventually decapitated the regime, the pair spoke about the sovereignty of the country as being a mere obstacle to economic experimentation. Wiblin, a former Executive Director at the Centre for Effective Altruism – the philosophical engine room for a significant faction of Silicon Valley – hypothesised a scenario where “Maduro gets removed” without saying by what means. Lutter revealed that his Centre for Innovative Governance Research was already drafting a white paper based on the “assumption” that this “transfer of power” would occur.

Crucially, Lutter framed this regime change as a necessary precondition for his ideology to take root. He argued that a post-Maduro Government, likely operating in a state of desperation, would be “willing to adopt ideas that otherwise they might not be willing to adopt” – specifically, handing over territory for autonomous charter cities.

The discussion stripped the Venezuelan crisis of its human cost, with Lutter re-framing the displacement of three million refugees not as a tragedy, but as a logistical “opportunity” to populate these experimental zones. For Lutter and Wiblin, the violent dismantling of a state was simply an “inflection point” to be exploited, with the only downside risk being that “Maduro might stay in power,” thereby rendering the charter city plan useless.

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The Vance Connection

Lutter is listed in the “Our Team” section of the Frontier Foundation, which campaigns for ‘Freedom cities’ along with Josh Abbotoy who reportedly helped the group get set up. Abbotoy is managing partner at a venture capitalist firm linked to Trump’s Vice-President JD Vance called New Founding.

In 2023, photographs and social media identified by The Guardian showed the New Founding team posing with JD Vance. Parker Magid, Vance’s Director of Media Affairs at the White House, was previously employed by Beck & Stone, a far-right political consultancy closely aligned with New Founding. The company is dedicated to ventures which support a “vital new American Right” aligned with ‘national conservative’ values, including US real estate projects to build autonomous communities for Christian nationalists. Pro-Trump donor and Silicon Valley billionaire Marc Andreessen has invested a six-figure sum as a limited partner into Abbotoy’s Vance-linked venture.

An analysis of the donor rolls of 80,000 Hours, the podcast show featuring Lutter’s ideas for Venezuela, reveals that by 2018, the organisation was backed by the ‘old guard’ of Facebook co-founder Dustin Moskovitz, as well as being simultaneously financed by a new generation of power brokers who would eventually align with the Trump White House – including Republican donor Sam Bankman-Fried (the FTX founder whose conviction for fraud in 2023 obliterated billions in promised funding and stained the effective altruism movement’s reputation), crypto founder Ben Delo (pardoned by Trump last year over his conviction for breaking money-laundering regulations), and OpenAI founder Sam Altman who presides over Trump’s $500 billion Stargate AI infrastructure project.

Moskovitz, who is 80,000 Hours’ biggest funder and a Democrat donor, was a major early investor in machine learning venture Vicarious (later acquired by Google owner Alphabet Inc) alongside pro-Trump Silicon Valley billionaires Peter Thiel, Joe Lonsdale, Mark Zuckerberg and Jeff Bezos.

Two days after the US invasion, Lutter suggested on X that the US Government could install a charter city in Venezuela by importing a legal framework from Florida or Texas, with finance guaranteed by the US Government.

“Venezuela doesn’t need to become another Iraq”, he opined on the platform. “It needs a Freedom City… Start with one city that actually works. A Freedom City = new land, new rules, real property rights, real rule of law – jointly built with the US.”

Peter Thiel has famously stated: “I no longer believe that freedom and democracy are compatible.” The potential reconstruction of Venezuela is the application of this “Exit” philosophy – carving out high-tech, fortified enclaves for the elite while the surrounding population is left to navigate the entropy of a failed state.

Mark Lutter was contacted for comment. Nick Allen of the Frontier Foundation, who co-authored a piece with Lutter shortly after Trump’s second term election victory promoting ‘freedom cities’ in the US, flatly denied that Lutter and Abbotoy were part of the Frontier Foundation team: “That section lists people who have ‘participated in one or more working group discussions hosted by the Frontier Foundation’. There is no management team other than directors of the 501c4, which myself and Tyler [Hudson-Crimi] are. No one else is or has ever been. And no there’s no co-founder, I’m the only founder.” He also denied that Josh Abbotoy had any role in helping set-up the organisation.

The Frontier Foundation’s website lists both Lutter and Abbotoy in a section called “Our Team”, which states: “Our team brings together distinguished domain experts, accomplished policy architects, industry leaders, and pioneers in urban development who share a vision of establishing next-generation cities that will secure America’s technological leadership and industrial competitiveness.”

Abbotoy could not be reached for comment.

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Erik Prince

The intervention also echoes ideas pushed by Erik Prince, founder of Blackwater (now Academi) and a long-time advocate for the privatisation of warfare.

Since 2024, Prince has championed “Ya Casi Venezuela” (“Almost There Venezuela”) a crowdfunding campaign for which he claims to have raised $1 million to oppose Maduro, but which observers have interpreted as part of a longstanding US push to destabilise his government. 

Erik Prince also appears to be linked to Josh Abbotoy’s New Founding venture network, tied to JD Vance and funded by Mark Andreessen, having appeared twice on its podcast in 2023 and 2024.

Through 2025, Prince increasingly ingratiated himself with the second Trump administration, being seen repeatedly at the Pentagon. He now reportedly participates in group chats with senior officials at the Department of Homeland Security, State Department and the White House National Security Council.

Prince recently pitched a $25 billion plan known as 2USV to the Trump administration. The proposal envisioned privatising the deportation of migrants and managing them in “sovereign leases” in Latin America – essentially renting territory from weak states to house detainees outside US legal jurisdiction.

Erik Prince had secretly met Delcy Rodríguez, Maduro’s Vice-President duly installed by Trump as Acting President after the 2026 invasion, back in 2019. Earlier in 2025, around the same time Prince was firmly back in the Trump camp, Rodriguez and her brother Jorge (president of the National Assembly) were in secret negotiations with the Trump administration “aimed at presenting themselves to Washington as a ‘more acceptable’ alternative to Nicolas Maduro’s regime”, according to an investigation by the Miami Herald. 

Restoration of democracy was not on the cards. Instead, the idea was to pursue a “Madurismo without Maduro,” which “could allow for a peaceful transition in Venezuela while preserving political stability without dismantling the governing apparatus.”

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The Overexpansion of US Empire

The “Network State” project for parallel societies and sovereign “freedom cities” is getting a significant boost from these developments. International sites identified for such experiments have consistently been targets for US annexation, takeover, or military action. 

Following the American strikes on Venezuela, Donald Trump promptly threatened Colombia, Mexico, Greenland, Iran and Cuba.

Apart from Iran, these countries appear to map directly onto the expansionist “Technate of America” plan advocated by the 1930s Technocracy movement. As Byline Times reported in March last year, this “technofascist” ideology which sought to replace democracy with an authoritarian elite of engineers, envisioned the United States absorbing a vast territory including Canada, Greenland, the Caribbean, and parts of South America such as Venezuela.

Elon Musk’s maternal grandfather, Joshua Haldeman, was a prominent leader in Technocracy Incorporated (a fact confirmed by Musk’s father, Errol, who has described Haldeman’s sympathies). Trump’s hostility toward these specific regions seems to reflect a resurrection of this decades-old blueprint for a continental super-state, orchestrated through the modern Trump-Musk alliance.

Musk, who has had a troubled relationship with Trump after becoming the biggest donor to his second term campaign, praised the US strikes in Venezuela, had dinner at the White House with both the American president and First Lady the night after the strikes, and claimed to offer free internet to Venezuelan citizens via Starlink (although Starlink is not actually available in the country).

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Fantasy Multi-Trillion Dollar Valuations

Beneath the triumphant rhetoric lies a hard physical reality that the new occupiers appear keen to ignore. The prize they have seized – Venezuela’s 303 billion barrels of oil – is not the lifeline for American energy security they claim. Far from being a treasure trove Venezuela’s reserves are a thermodynamic black hole that will consume billions in capital while yielding only a fraction of the expected returns.

Holding the largest proven oil reserves in the world, Venezuela is seen by the Trump administration as a potential reserve base large enough to alter global pricing dynamics outright, valued at $18 trillion at current prices – and potentially as high as $45 trillion – according to Forbes. Such eye-popping figures rival the current collective market capitalisation of the seven biggest companies in the US stock market and perhaps the world – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla – whose combined equity value totals roughly $18 to $20 trillion, depending on market conditions.

Yet this valuation of Venezuelan oil is in reality a fantasy derived from financial speculation rather than reality.

The viability of an energy source is determined not just by the volume of the reserve, but by how much you can actually extract relative to what it costs to do so. That relationship is captured in the concept of Energy Return on Investment (EROI) – the ratio of energy delivered to society versus the energy consumed to extract it. In the early 20th century, conventional oil offered an EROI of 100:1. Today, according to research published by the Royal Society, the global average for fossil fuels has plummeted to below 15:1. Venezuela’s reserves, located primarily in the Orinoco Belt, sit at the very bottom of this efficiency curve.

In the oil industry, API gravity is a specialised scale used to determine how ‘heavy’ or ‘light’ a liquid is compared to water. While pure water is assigned a value of 10 degrees, most tradable oils are lighter and float on top of it. However, much of the “oil” found in Venezuela’s massive Orinoco Belt falls into the “extra-heavy” category, with an API gravity between 8 and 10 degrees. This means the oil is actually denser than water and has a thick, tar-like consistency.

At surface temperature, according to Stanford University research, it is a near-solid sludge. It does not flow. To extract it, companies must inject massive amounts of natural gas or steam to heat the reservoir, or dilute the sludge with imported light hydrocarbons such as naphtha.

This process imposes a kind of “thermodynamic tax.” Studies indicate that the EROI of extra-heavy crude is often 6:1 at the mine mouth, and can drop closer to 3:1 when refined. This is well below what pioneering systems ecologist Professor Charles Hall has termed the “Net Energy Cliff” – research calculating that modern industrial civilisation requires an EROI of at least 12:1 to maintain public services like healthcare and education.

Six years ago, I warned that the self-cannibilising economic dynamics of Venezuela’s extra heavy oil are what increasingly made it a money and energy sink. State mismanagement and corruption worsened these dynamics. Even during the bonanza of triple digit oil prices in the 2010s, Venezuelan oil production plummeted from around 3.5 million barrels per day (bpd) in 2008 to a low of approximately 500,000 bpd in 2021, representing a drop of over 80%.

In the meantime, US sanctions compounded the predicament by starving Venezuela’s state oil company PDVSA of the diluents needed to move this sludge.

The US “reconstruction” plan involves shipping diluents back to Venezuela to restart this cycle. But this is thermodynamically irrational. The US is expending high-quality military and industrial energy to secure a low-quality, high-entropy resource. 

Rystad Energy estimates that $183 billion would need to be invested over 15 years to get Venezuela back to 3 million bpd levels. Given the low EROI levels, that’s likely an underestimate of the Venezuela ‘energy sink’. The figure includes a staggering $53 billion ‘standing still’ cost required just to fight natural decline and hold current output flat. This implies that nearly a third of the proposed investment would vanish into maintenance without generating a single new barrel of growth.

When adjusted for the thermodynamic inefficiency of extra-heavy crude, the total collapse of infrastructure and the ‘brain drain’ of skilled labour, the real bill would likely be much higher and actual production gains much smaller.

Either way, in effect, to revive Venezuela you would need to create the equivalent of a brand new Chevron or BP, force it to dedicate 100% of its budget solely to one of the world’s most hostile environments for the next 15 years, and then proceed to sell an inferior product at a loss.

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The ‘Mad Max’ Hemisphere

In the language of complex systems science, the US empire has entered the “Release” (or Omega) phase of the adaptive cycle – a phase characterised by the release of bound-up resources and the chaotic unravelling of rigid structures.

World renowned economist Wim Naudé has identified “Military-Industrial Overreach” and “Technological Conservatism” as key sources of “rot” that precede imperial collapse. By doubling down on 20th-century fossil fuel infrastructure via a costly military adventure, the US is accelerating its own insolvency. As its own shale resources enter the twilight period, America has grabbed control of a massive fossil fuel repository which has already entered its darkest hours.

Ten years ago, I interviewed the late futurist and godfather of peace studies Professor Johan Galtung, who had accurately predicted the fall of the Soviet Union years earlier. Galtung told me a month after Trump’s first election victory that America was following the same patterns he had seen lead to the USSR’s break-up. He warned that a declining US would turn to “reactionary fascism” – a cult of force and exceptionalism – to maintain its standard of living as its economic hegemony wanes.

The ‘Donroe’ doctrine of American dominance “in the Western Hemisphere” used to justify this raid is the geopolitical expression of that decline.

Meanwhile, the tech oligarchs backing this intervention are already discussing their own exits from American jurisdiction, as states like California consider billionaire taxes that would fund public services. The Network State project is, at its core, a mechanism for elite capital flight dressed in the language of innovation.

The unlawful deployment of American power presents the perfect platform to create a fractured landscape of high-tech, sovereign “Freedom Cities” run by corporate warlords, surrounded by a sea of energy-starved populations.

Yet this attempted debut of the Network State through the capture of Nicolás Maduro risks being a pyrrhic victory.

Premised on a mirage, the United States’ actions have secured custody of an energy resource that it cannot afford to extract, in a country it cannot afford to rebuild.

It is only a matter of time before the US faces the consequences of this paradox.