ExxonMobil has warned that Venezuela remains “uninvestable” without “significant changes” in a rebuke to Donald Trump’s call for oil companies to pour billions of dollars into revitalising its oil industry.
Darren Woods, chief executive of the biggest US oil major, struck a sceptical tone at a televised White House gathering of energy bosses on Friday — even as some other companies expressed optimism about the potential to tap the world’s biggest oil reserves.
“If we look at the legal and commercial constructs, frameworks in place today in Venezuela, today it’s uninvestable,” Woods told Trump in a meeting that included many of America’s most prominent energy executives and some of the president’s top lieutenants.
“Significant changes have to be made to those commercial frameworks, the legal system, there has to be durable investment protections, and there has to be change to the hydrocarbon laws in the country.”
Woods said the company’s assets in Venezuela had been seized twice since Exxon first entered the country back in the 1940s.
His remarks underline how the biggest energy groups remain reluctant to rush into making big capital commitments in Venezuela even as Trump seeks to cajole them into pouring “at least $100bn” into the country to increase production and drive down US oil prices.
The meeting came less than a week after Trump launched an audacious operation to capture strongman leader Nicolás Maduro in Caracas and claim control of the country’s vast natural resources.
Trump told the executives he would decide which companies were allowed to enter Venezuela and that they needed to make a decision quickly. “If you don’t want to go in, just let me know, because I got 25 people that aren’t here today that are willing to take your place.”
The FT reported earlier this week that the industry was unlikely to commit to making big investments in Venezuela without legal, financial and security assurances from Washington.
Other oil executives gathered at the White House — including services groups and those that already have operations on the ground — were more receptive to the president’s overtures, suggesting some level of capital could flow into the country in the near term.
Chevron said it could boost production by 50 per cent within 18 to 24 months by expanding its existing operations, which pumps about 240,000 barrels per day. Shell boss Wael Sawan said the European oil major had “a few billion dollars’ worth of opportunities to invest in” subject to the US providing waivers to its sanctions. “We are ready to go,” he said.
Spain’s Repsol said it could triple its current production to more than 150,000 b/d within two to three years. Eni, which has about 500 people working in Venezuela, said it had 4bn barrels of reserves in the country and was ready to boost investment.
When pressed by Trump, Woods said Exxon would send a technical team to Venezuela within weeks to assess conditions. He also said he was “confident” that the changes needed for investment “can be put in place”.
Harold Hamm, founder of Continental Resources and a longtime Trump ally, declined to make any commitments to invest in Venezuela even as he described its vast reserves as a “real jewel”.
Asked directly by Trump if he planned to inject capital into the country, Hamm said Venezuela was a “very exciting thing” with “challenges” that he said the industry “knows how to handle”.
The mixed messages from executives on Friday underline the complexities faced by oil companies as they weigh how to respond to Trump’s calls to inject capital into a country that remains unstable and where many of them were burned by expropriations in recent decades.
“The legal, political and geopolitical risks of going into Venezuela to make the sort of large investments that the administration seems to want are very significant,” said Meghan O’Sullivan, a Harvard professor and expert on geopolitics and energy.
But even as he sought to convince them to make sweeping investments, Trump appeared reluctant to make any significant concessions to the oil companies about reimbursements or financial guarantees.
The president made clear that companies that had assets seized in the past were unlikely to receive compensation. He told ConocoPhillips chief executive Ryan Lance, whose company lost $12bn to expropriations: “You’re going to make a lot of money, but we’re not going to go back.”
“We’re going to start with an even plate,” Trump said. “We’re not going to look at what people lost in the past because that was their fault. That was a different president.”
Trump also appeared to rule out using US tax revenues to reimburse companies for investing in Venezuela, something he had previously floated, telling the executives they “don’t need government money”.
“Our giant oil companies will be spending at least $100bn of their money — not the government’s money,” he said.
When asked later about financial backstops for the companies, Trump said he hoped these would not be needed. But he signalled the US government could provide some form of security and legal guarantees, which have been key demands by the industry. “You’ll have total safety.”
However, Trump suggested the Venezuelan regime, rather than US troops, would provide security on the ground. “I think the people of Venezuela are going to give you a very good security.”
Legal experts said there was “significant interest” among companies in potential investments in Venezuela, but that it would take major undertakings before that was converted into action.
“The dilemma at the moment is that the landscape hasn’t settled yet, there are logistical and political challenges,” said Carlos Solé, co-chair of law firm Baker Botts’ Latin America practice.
He said that much needed to change before companies took action, including making it easier for US companies to get licences or sanctions waivers from the Office of Foreign Assets Control to carry out transactions in the country.
Aurelio Fernandez-Concheso, the head of law firm Clyde & Co’s Venezuela office, said he had received a lot of calls from clients in the oil and gas, transport and insurance industries about doing business in the country but that there was “a lot of caution about how it will develop”.
“It’s one thing to pick up the phone and call an adviser, and it’s a different thing to write a cheque and put money into the country.”
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