natalie shermanbusiness reporter
US President Donald Trump has sought at least $100 billion (£75 billion) in oil industry spending for Venezuela, but he received a lukewarm response at the White House as an executive warned that the South American country is not currently “investable”.
The owners of the largest US oil companies attending the meeting acknowledged that Venezuela, sitting on vast energy reserves, represents an attractive opportunity.
But he said significant changes would be needed to make the sector an attractive investment. No major financial commitments were immediately forthcoming.
Trump has said he will seize the South American nation’s oil after US forces captured its leader Nicolas Maduro in a January 3 raid on the capital.
“One of the things the United States will get from this will be lower energy prices,” Trump said during Friday’s meeting at the White House.
But oil owners present expressed caution.
Exxon Chief Executive Darren Woods said: “Our assets have been seized there twice and so you can imagine that re-entering for a third time would require some significant changes given what we have seen historically and the state we currently have.”
“Today it is not worth investing in.”
Venezuela has had a complex relationship with international oil companies since oil was discovered on its territory more than 100 years ago.
Chevron is the last remaining major US oil company still operating in the country.
A handful of companies from other countries are also active, including Spain’s Repsol and Italy’s Eni, both of which were represented at the White House meeting.
Trump said his administration would decide which companies would be allowed to operate.
He said, “You’re dealing directly with us. You’re not dealing with Venezuela at all. We don’t want you dealing with Venezuela.”
The White House has said it is working to “selectively” withdraw US sanctions restricting Venezuelan oil sales.
Officials say they are coordinating with interim authorities in the country, currently led by Maduro’s former second-in-command, Vice President Delcy Rodriguez.
But they have also made clear that they intend to take control of the sale as a way to maintain influence over Rodriguez’s government.
The US this week seized several oil tankers carrying sanctioned crude. US officials have said they are working to set up a sale process that would deposit the funds raised into US-controlled accounts.
“We’re open for business,” Trump said.
Venezuelan oil production has suffered in recent decades due to disinvestment and mismanagement, as well as US sanctions. At about one million barrels per day, the country accounts for less than 1% of global supply.
Chevron, which accounts for about a fifth of the country’s output, said it expected to increase its output based on its current footprint, while Exxon said it was working to send a technical team to assess the situation in the coming weeks.
Repsol, which currently claims production of about 45,000 barrels per day, said it sees a path to tripling its production in Venezuela under the right conditions over the next few years.
Executives at other companies also said Trump’s promises of change will encourage investment and they are hoping to take advantage of the moment.
“We are ready to go to Venezuela,” said Bill Armstrong, who leads an independent oil and gas driller. “In terms of real estate, this is prime real estate.”
But analysts say significant efforts will be required to meaningfully increase production.
“They’re being as polite as humanly possible, and being as helpful as possible, without earning real dollars,” said David Goldwyn, president of energy consulting firm Goldwyn Global Strategies and a former U.S. State Department special envoy for international energy affairs.
Exxon and Shell are “not going to invest single-digit billions of dollars, much less tens of billions of dollars” without physical security, legal certainty and a competitive fiscal framework, Goldwyn said.
“It’s really not welcome from an industry perspective,” he said. “Things are not good.”
While smaller companies may be more eager to help boost Venezuela’s oil production over the next year, he said those investments would likely remain in the $50 million range — a far cry from the “fantastic” $100 billion figure touted by Trump.
Rystad Energy estimates that tripling production by 2040 will require $8 billion to $9 billion in new investment per year.
Claudio Galimberti, the company’s chief economist, said Trump’s suggested $100 billion investment in Venezuela could have a major impact on production – if it materializes.
He said companies would be likely to invest at that scale only with subsidies and political stability. He said Americans should not expect oil prices to drop anytime soon because of the situation in Venezuela.
“It will be difficult to see major commitments before there is a completely stable political situation and it’s anyone’s guess when that will happen,” he said.
Additional reporting by Danielle Kaye