Trump Seeks $100bn for Venezuela Oil, but Exxon Boss Declares Country ‘Uninvestable’
US President Donald Trump has proposed an ambitious plan to secure at least $100bn (£75bn) in investments for Venezuela’s oil industry. However, the response from major oil executives at a recent White House meeting was tepid, with one prominent leader cautioning that the South American nation remains uninvestable.
Challenges Facing Investment in Venezuela’s Oil Industry
– Vast Reserves vs. Investment Appeal: While Venezuela possesses significant energy reserves, industry leaders expressed that substantial reforms are necessary for it to become a viable investment option.
– Lack of Immediate Commitments: Despite recognizing the potential, no major financial commitments emerged from the meeting. Executives pointed to the risks and uncertainties involved.
Trump’s Vision for Venezuela’s Oil
Trump championed the idea of revitalizing Venezuela’s oil sector following a US military operation that seized control from its leader, Nicolás Maduro, on January 3. He stated, One of the things the United States gets out of this will be even lower energy prices.
The Executive Perspective
– Cautious Optimism: Exxon CEO Darren Woods highlighted past challenges, mentioning that their assets have been seized twice, making a return to Venezuela contingent upon considerable changes in the current environment. Today it’s uninvestable, he asserted.
– Historical Context: Venezuela has had a tumultuous relationship with international oil companies since oil was first discovered over a century ago. Currently, Chevron stands as the last major American firm still operating there, alongside a few European companies like Spain’s Repsol and Italy’s Eni.
Control Over the Oil Sector
Trump has emphasized that US firms will dictate operations in Venezuela, stating, You’re dealing with us directly. We don’t want you to deal with Venezuela. His administration is reportedly working to selectively ease sanctions that have limited Venezuelan oil exports, intending to coordinate with interim authorities under Vice-President Delcy Rodríguez.
Current Production and Future Potential
– Diminished Output: Venezuela’s oil production has drastically declined due to years of mismanagement, disinvestment, and US sanctions, currently standing at approximately one million barrels per day—less than 1% of global supply.
– Investment Expectations:
– Chevron anticipates boosting its production due to its established presence.
– Exxon plans to deploy a technical assessment team soon.
– Repsol aims to triple its production from the current 45,000 barrels per day under favorable conditions.
Industry Insights and Predictions
While some executives believe Trump’s initiative could stimulate investment, caution prevails within the industry. David Goldwyn, a former US State Department special envoy for international energy affairs, noted that major oil firms like Exxon and Shell are unlikely to invest significant capital without guaranteed security, legal clarity, and a favorable fiscal environment.
– Small Companies’ Interest: Smaller firms may be more inclined to explore opportunities in Venezuela, but their investments are expected to remain modest—around $50 million—far from Trump’s ambitious $100bn goal.
Conclusion: The Road Ahead for Venezuela’s Oil
Analysts indicate that the scale of investment Trump envisions may require substantial subsidies and a stable political climate. Claudio Galimberti from Rystad Energy estimates that achieving even a tripling of production by 2040 would necessitate annual investments of $8bn to $9bn. It’s difficult to foresee significant commitments before we have a fully stabilized political situation,” he cautioned. Therefore, American consumers should not anticipate a reduction in oil prices from Venezuela in the near future.
The complexities of reviving Venezuela’s oil industry demonstrate a challenging interplay of politics, economics, and investment strategy in this crucial sector.