US President Donald Trump has called on oil company executives to urgently return to the country as the White House seeks to urgently secure $100 billion in investment to restore the country’s ability to make the most of its vast reserves.
President Trump opened a meeting with oil industry executives on Friday to assure them there was no need to be skeptical about quickly investing in and possibly returning to the South American country, which has a history of asset seizures, continued U.S. sanctions and current political uncertainty.
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“You have complete security,” Trump told the executives. “You’re dealing directly with us, and you’re not dealing with Venezuela at all. We don’t want you dealing with Venezuela.”
“Our big oil companies will be spending at least $100 billion on non-government money. They don’t need government money, but they do need government protection,” Trump said.
President Trump welcomed oil executives to the White House early Friday morning after the U.S. military seized the fifth tanker in the past month linked to Venezuelan oil. This action reflects the United States’ determination to maintain full control over the export, refining, and production of Venezuelan oil and signals the Trump administration’s continued involvement in this area while seeking the involvement of private companies.
“At least $100 billion will be invested by BIG OIL, and I will be meeting with all of them today at the White House,” Trump said in a social media post early Friday.
The White House has invited executives from 17 oil companies, including Chevron, which still operates in Venezuela, as well as ExxonMobil and ConocoPhillips, which had oil projects in the country but said they were lost as part of the 2007 nationalization of private companies under former President Nicolas Maduro’s predecessor, Hugo Chávez.
“If you look at the commercial structure and framework that is currently in place in Venezuela, it is uninvestable today,” said ExxonMobil CEO Darren Woods. “Therefore, we need significant changes to our commercial framework and legal system, we need permanent investment protection, and we also need to change our domestic hydrocarbon laws.”
Benjamin Ladd, a senior fellow at UCLA’s Burkle Center for International Relations, told Al Jazeera that Woods “noted a reluctance and lack of enthusiasm” about re-entering the Venezuelan market, and that Woods had told the gathering that his company had already had its assets in the country seized twice.
“The bottom line is that it will remain a risky endeavor for these oil companies to re-engage with Venezuela until President Trump can outline and provide assurances of a plan for political stability. “What would it mean for there to be a change of ownership and suddenly it re-emerges as a place where Western oil companies can do business? Even if the reserves aren’t on par with what Venezuela has, the risks are much less and the infrastructure is better,” Rudd said.
Other companies invited included Halliburton, Valero, Marathon, Shell, Singapore-based Trafigura, Italy-based Eni and Spain-based Repsol, as well as national and international companies with interests in a wide range of sectors, from construction to commodity markets.
Please wait and see
Major U.S. oil companies have so far largely refrained from affirming investments in Venezuela because of the required contracts and guarantees. President Trump has indicated that the United States will help backstop any investment.
Venezuela’s crude oil production is below 1 million barrels per day (bpd). One of President Trump’s challenges to turning the situation around will be to convince oil companies that his administration has a stable relationship with Venezuela’s interim president Delcy Rodríguez and protects companies entering the market.
Rodriguez has publicly condemned Trump and Maduro’s abduction and ouster, but the U.S. president has previously said Venezuela’s interim leader is cooperating with his regime behind the scenes.
Rachel Ziemba, a nonresident senior fellow at the Center for a New American Security, said most companies are in a wait-and-see mode as they wait for terms and stability from the Venezuelan side and wait to see how much help the U.S. government will actually provide.
Ziemba noted that companies that are already in the market, like Chevron, are in a better position to increase investment because they “already have sunk costs.”
Ziemba said he expected a partial increase in the first half of this year as volumes that were destined for China, the biggest buyer of Venezuelan oil, will be redirected and sold through the United States. “But long-term investment will be slow,” he said, as companies wait to learn about U.S. commitments and Venezuela’s terms.
Tyson Slocum, director of the consumer advocacy group Public Citizen Energy Program, criticized the rally and called the U.S. military’s removal of Maduro “violent imperialism.” Slocum added that President Trump’s goal appears to be “to hand over control of Venezuelan oil to billionaires.”
So far, the U.S. government has not disclosed how proceeds from the sale of Venezuelan oil will be distributed or what percentage of sales will go to Caracas.
Ziemba said he was concerned that “if funds are not sent to Venezuela for essential needs, among other local needs, there will be instability and the country’s economic crisis will deepen.”
At a press conference Friday, President Trump said the U.S. has a formula for distributing payments. “If the United States can or will guarantee security and stability, it makes sense to expect a return on investment in that sense, but then it sounds more like a mafia-style ‘racket’ than a government-led operation,” UCLA’s Rudd told Al Jazeera.
Meanwhile, the U.S. and Venezuelan governments announced Friday that they are exploring the possibility of restoring diplomatic relations between the two countries, and a delegation from the Trump administration arrived in the South American country on Friday.
