Trump seeks $100bn for Venezuela oil, but Exxon boss says country ‘uninvestable’
US President Donald Trump has demanded at least $100bn (£75bn) in oil industry spending for Venezuela but received a tepid response from the White House after an executive warned the South American country was currently “uninvestable”.
Bosses of the largest US oil companies attending the meeting agreed that Venezuela, with its large energy reserves, represents an attractive opportunity.
But they said significant changes would be needed to make Venezuela an attractive investment. No major financial commitments were immediately made.
Trump said he would release the South American country’s oil after US forces captured leader Nicolas Maduro in a raid on the capital on January 3.
“One of the things the United States will get out of this will be further decline in energy prices,” Trump said at the meeting held at the White House on Friday.
However, oil bosses present expressed caution.
Darren Woods, Exxon’s chief executive, said: “We’ve had our assets seized there twice, and so you can imagine going back in for a third time would require some pretty significant changes based on what we’ve seen in the past and the current situation.”
“Investment cannot be made today.”
Venezuela has had a complicated relationship with international oil companies since oil was discovered on its territory more than 100 years ago.
Chevron is the last major American oil company operating in the country.
A handful of companies from other countries also operate, including Spain’s Repsol and Italy’s Eni, which were represented at the White House meeting.
Trump said his administration will decide which companies will be allowed to operate.
“You are doing direct business with us. You have absolutely no interest in Venezuela. We do not want you to deal with Venezuela,” he said.
The White House said it was working to “selectively” roll back U.S. sanctions restricting the sale of Venezuelan oil.
Officials say they are coordinating with interim authorities in the country, now led by Vice President Delcy Rodríguez, Maduro’s former second-in-command.
But they have also made clear that they plan to maintain control over sales as a way to keep pressure on Rodríguez’s government.
The United States this week seized several oil tankers carrying sanctioned crude oil. American officials said they were trying to set up a sales process that would ensure that the money collected would be deposited into US-controlled accounts.
“We’re open for business,” Trump said.
Venezuela’s oil production has been affected by US sanctions as well as lack of investment and mismanagement in recent years. At around one million barrels a day, the country accounts for less than 1% of global supply.
Chevron, which accounts for about one-fifth of the country’s production, stated that it expects to increase its production by maintaining its current presence, while Exxon said it is trying to send a technical team to assess the situation in the coming weeks.
Repsol, which currently has production of about 45,000 barrels per day, said it sees a way to triple its production in Venezuela over the next few years under the right conditions.
Executives at other firms also said Trump’s promises of change will spur investment and they hope to seize the moment.
“We’re ready to go to Venezuela,” said Bill Armstrong, who runs an independent oil and gas driller. “In terms of real estate, it is first-class real estate.”
But analysts say significantly increasing production will require significant effort.
“They’re being as humane as possible and being as supportive as they can without committing actual dollars,” said David Goldwyn, president of energy consultancy Goldwyn Global Strategies and former U.S. State Department special envoy for international energy affairs.
Goldwyn said Exxon and Shell “will not invest single-digit billions of dollars, much less tens of billions of dollars” without physical security, legal certainty and a competitive financial framework.
“From an industry perspective, it’s not very welcome,” he said. “The conditions are not suitable at all.”
While smaller companies may be more willing to help increase Venezuela’s oil production next year, those investments will likely hover in the $50 million range, he said; This is a far cry from the “fantastic” $100 billion figure put forward by Trump.
Rystad Energy estimates that $8 billion to $9 billion per year in new investment is needed to triple production by 2040.
Claudio Galimberti, the company’s chief economist, said Trump’s $100 billion investment in Venezuela could have a big impact.
He said that companies can only invest on this scale with subsidies and political stability.
“It will be difficult to see major commitments before we have a fully stabilized political situation, and anyone can guess when that will happen,” he said.
Additional reporting by Danielle Kaye
