US President Donald Trump met with oil executives in Washington on Friday as he made the case for major investments in Venezuela.
But no major financial commitments immediately emerged from the meeting, with the ExxonMobil boss warning that the South American country was currently “uninvestable”.
Trump said he expects major oil companies to commit “at least” $100 billion (£75 billion) to the country, but industry analysts have warned that many companies would be reluctant to take the plunge in a situation that still carries significant risks.
Last week, the United States arrested Venezuelan leader Nicolás Maduro, who is currently detained in New York.
Maduro’s vice president, Delcy Rodríguez, considered rather pragmatic, is now interim president.
Executives from the largest U.S. oil majors at the meeting acknowledged that the country, which has vast proven oil reserves, represents a major opportunity.
But in a news conference with Trump, they warned that they would need significant changes in Venezuela, as well as a positive reception from the local government and its people, to make it an attractive place to invest money.
“Our assets have been seized there twice and so you can imagine that going back a third time would require some pretty significant changes from what we’ve seen historically and what the state is currently,” Exxon Chief Executive Darren Woods said. “Today, it’s not investable.”
Venezuela has had a complicated relationship with international oil companies since the discovery of oil on its territory more than 100 years ago.
Chevron is the last major U.S. oil company still operating in the country, while a handful of companies from other countries, including Spain’s Repsol and Italy’s Eni, were both represented at the White House meeting.
Exxon and ConocoPhillips, which also attended, are fighting to recoup billions of dollars owed to them after the nationalization of their assets in 2007.
Trump has alluded to the issue several times this week to justify his intervention, including on Friday, but he downplayed the chances of recovery during the meeting, echoing comments from other administration officials in recent years who have said paying off those debts is not an immediate priority.
“We’re not going to go back,” Trump said. He said his administration would work to strike a “deal” with businesses to realize his vision of reviving the industry.
Venezuela has some of the world’s largest reserves.
But its production has fallen sharply in recent decades due to disinvestment and mismanagement – not to mention US sanctions, which have limited its access to the global market.
Approximately 1 million barrels per day, the country’s production now represents less than 1% of global supply.
The White House has said it is working to “selectively” lift these restrictions, but Trump officials have also made clear that they intend to exercise control over Venezuelan oil sales, in order to maintain their influence over the Venezuelan government.
The United States this week seized several tankers carrying sanctioned crude. U.S. officials said they were working to set up a sales process, which would deposit the money collected into U.S.-controlled accounts.
“We’re open for business,” Trump said.
Chevron said it planned to increase production, building on its current presence, while Exxon said it was working to send a technical team to assess the situation in the coming weeks.
Repsol, which currently has production of around 45,000 barrels per day, said it is considering a way to triple its production in Venezuela over the next few years, given the right conditions.
Executives at other companies also said Trump’s promises of change would encourage investment and they hoped to seize the opportunity.
“We’re ready to go to Venezuela,” said Bill Armstrong, who runs an independent oil and gas drilling company. “In real estate terms, this is prime real estate.”
But analysts say significantly increasing production would require considerable effort.
“They’re being as polite as possible and supportive as much as they can, without committing real dollars,” said David Goldwyn, president of energy consultancy Goldwyn Global Strategies and former U.S. State Department special envoy for international energy affairs.
Big oil companies like Exxon and Shell “are not going to invest billions of dollars, let alone tens of billions of dollars,” without physical security, legal security and a competitive tax framework, Goldwyn said.
“It’s not really welcome from an industry perspective,” he said. “The conditions are just not right.”
Still, he added that smaller companies may be more eager to jump in and help increase Venezuela’s oil production over the next year. But these investments would likely be around $50 million – far from the “fantastic” $100 billion figure put forward by Trump.
Rystad Energy estimates that it would take between $8 billion and $9 billion in new investments per year to triple production by 2040.
Trump’s proposed $100 billion investment in Venezuela could have a major impact – if it comes to fruition, said the firm’s chief economist, Claudio Galimberti.
He said companies would only be likely to invest on this scale with subsidies – and political stability.
“It will be difficult to see significant commitments until we have a completely stabilized political situation and no one can guess when that will happen,” he said.
Additional reporting by Danielle Kaye
