In a bold move, President Donald Trump has proposed a staggering investment of at least $100 billion in the Venezuelan oil sector. However, this ambitious plan met with a tepid reception during a recent White House meeting, where industry leaders expressed skepticism about the country's current investment climate, with one executive stating that Venezuela is "un-investable" right now.
The heads of major American oil companies who attended the discussion recognized that Venezuela possesses immense energy reserves, making it a potentially lucrative opportunity. Yet, they unanimously agreed that substantial reforms would be necessary to transform Venezuela into an appealing destination for investment. Consequently, no immediate financial commitments were made at the meeting.
Trump's optimistic vision for Venezuela's oil industry comes on the heels of a military operation on January 3rd, which resulted in the capture of its controversial leader, Nicolas Maduro. He confidently remarked at the meeting, "One of the things the United States gets out of this will be even lower energy prices."
Despite Trump's enthusiasm, the oil executives exercised caution. Darren Woods, the CEO of Exxon, pointed out their previous experiences in Venezuela, where their assets had been seized not once, but twice. He emphasized that re-entering the market would necessitate significant changes from the nation's historical practices as well as its current state, declaring, "Today it's uninvestable."
For over a century, Venezuela has maintained a complex and often tumultuous relationship with international oil companies. Currently, Chevron stands as the last major U.S. oil firm still active in the country, while several foreign companies, including Spain's Repsol and Italy's Eni, were also represented at the White House meeting.
Trump asserted that his administration would have the final say on which companies would be permitted to engage in operations within Venezuela. He stated, "You're dealing with us directly. You're not dealing with Venezuela at all. We don't want you to deal with Venezuela."
The White House has indicated plans to selectively ease U.S. sanctions that have hampered Venezuelan oil sales. Officials have been collaborating with interim authorities in the country, currently led by Vice President Delcy Rodríguez, who previously served as Maduro's deputy. However, the U.S. intends to retain control over the oil sales as a means of maintaining leverage over Rodríguez’s government.
This week, U.S. authorities have seized several oil tankers transporting sanctioned crude oil. They are also working towards establishing a sales process that would channel the proceeds into accounts under U.S. control. Trump proclaimed, "We are open for business."
In recent years, Venezuela's oil production has plummeted due to a combination of disinvestment, mismanagement, and U.S. sanctions. At present, the country produces around one million barrels of oil per day, equating to less than 1% of the global supply.
Chevron, which is responsible for approximately 20% of Venezuela's oil output, expressed optimism about increasing production and enhancing its current operations. Meanwhile, Exxon indicated plans to dispatch a technical team to evaluate the situation in the upcoming weeks. Repsol, currently producing around 45,000 barrels per day, stated that it could potentially triple its output in Venezuela under favorable conditions.
Other company executives echoed Trump’s assertions of impending change that could stimulate investment, expressing hope to capitalize on this pivotal moment. Bill Armstrong, leading an independent oil and gas drilling company, likened Venezuela's potential to prime real estate, saying, "We are ready to go to Venezuela."
However, analysts caution that significantly boosting production will require considerable effort and resources. David Goldwyn, president of the energy consultancy Goldwyn Global Strategies and a former U.S. State Department special envoy for international energy affairs, noted, "They are being as polite as humanly possible, and being as supportive as they can, without committing actual dollars."
Goldwyn further explained that major companies like Exxon and Shell are unlikely to invest single-digit billions, let alone tens of billions, without assurances of physical security, legal certainty, and a favorable fiscal framework. He concluded, "It's not really welcome from an industry point of view. The conditions are just not right."
While smaller firms may be more inclined to invest in Venezuela's oil sector in the next year, such investments are likely to remain modest, hovering around the $50 million mark—far from the ambitious $100 billion figure proposed by Trump.
Experts from Rystad Energy estimate that to triple production by 2040, Venezuela would need an influx of new investments ranging from $8 billion to $9 billion annually. Trump's proposed investment could dramatically reshape the landscape should it ever materialize, according to Claudio Galimberti, the firm's chief economist. He cautioned, however, that significant investments would only likely occur alongside subsidies and a stable political environment.
"It's going to be difficult to see big commitments before we have a fully stabilized political situation, and when that will happen is anyone's guess," he remarked.
