Trump administration launches new bid to attract US oil companies to Venezuela – but finds few buyers
When U.S. Interior Secretary Doug Burgum traveled to Venezuela with oil and mining executives last month, he was trying to stress to them the opportunity that exists in that country’s neglected oil and gas fields.
Then at a conference in Houston last week, he again tried to sell a room full of energy executives on the South American country’s vast reserves of oil, natural gas and precious metals.
Burgum — who plays a key role in the Trump administration — used the word “opportunity” three times when speaking about Venezuela at S&P Global’s recent CERAWeek energy conference.
“The resources there are pretty amazing,” Burgum said.
US Energy Secretary Chris Wright also appeared to advocate for Venezuela’s sale, telling the conference how well the interim government and the US administration are “aligned” when it comes to increasing Venezuelan production.
But it’s not clear whether oil and gas executives are buying.
Venezuela faces a host of challenges, ranging from ongoing security concerns to an unstable government, as well as the massive investment needed to improve infrastructure in its abandoned oil fields.
US President Donald Trump is pressuring US oil and gas executives to invest in Venezuela’s energy sector, nearly three months after the overthrow of the government. of former President Nicolas MaduroAs it is said that the country has the world’s largest reserves of crude oil.
Trump took over the White House in January meeting The owners of the largest US oil companies have sought investments of at least US$100 billion to increase Venezuelan oil production to help lower US energy prices.
Venezuela, once a major producer, pulled only about 900,000 barrels a day out of the ground last year, after years of declining investment due to sanctions and failed government policies.
At its peak in 1970, Venezuela produced 3.7 million barrels per day.
According to Rystad Energy, Venezuela needs capital investments of about US$183 billion between 2026 and 2040 to restore oil production to three million barrels per day.
Venezuela sits on one of the world’s largest oil reserves – but not all oil is created equal. CBC’s Johanna Wagstaffe explains how millions of years of buried seafloor and oil-eating bacteria turned that reservoir into the heaviest, hardest-to-extract crude on the planet.
Luis A., a visiting fellow at the Baker Institute in Texas and former Venezuelan energy executive. The country’s energy sector has yet to see a turning point as a result of U.S. involvement, Pacheco said.
“The Trump administration’s actions created a great expectation that has not been met to date,” Paceo said. “We’re not as close as we’d like.”
limited interest in investment
Some companies with existing operations in the country are considering whether to expand.
UK-based global energy company Shell may decide on investing in one or two natural gas projects in Venezuela by the end of this year.
“I don’t think anyone would dispute the vastness of the resource base in Venezuela,” said Shell Chief Executive Vel Savan, pointing to the need for continued legal and financial regulation changes by the Venezuelan government to create a stable investment climate.
“I’m encouraged by what we see. But we still have a long way to go,” he said.
A team from ExxonMobil was in Venezuela last week to assess the state of energy infrastructure.
Meanwhile, Chevron has increased its oil production in the country in recent months, but the message from Chief Executive Mike Wirth remained cautious. “There are still things that need to be done to encourage investment at the scale that people would like to see,” he said, pointing to legal reforms as an example.
For others, Venezuela is still a work in progress where it is still too early to consider investment.
The ruling government recently updated its hydrocarbon law, but it is “grossly inadequate,” ConocoPhillips CEO Ryan Lance said.
The hydrocarbon law now allows private companies, including foreign companies, greater autonomy in the country’s lucrative oil sector, whereas the previous law gave state oil company PDVSA majority control over the operation of oil projects.
“You need policy stability not only on the Venezuelan side, but also on the U.S. side. What happens when another administration comes in?” Lance said.
concerns remain
Venezuela produces heavy crude oil, similar to the type of oil that is produced mostly in western Canada. In January, oil prices began to rise heavily in Canada slip The possibility that some U.S. refineries may be in demand for Canadian oil in the future following the turmoil in Venezuela.
But to compensate for decades of not respecting property rights and contracts, Venezuela will have to provide a higher level of guarantees and policy certainty to foreign investors than other countries, said Luisa Palacios, an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy.
Over the past decades, assets of foreign companies have been confiscated. In the case of ExxonMobil, this happened twice.
At some point, the country will hold elections, as Delsey Rodriguez will remain in a temporary role as acting president.
Nobel Peace Prize winner Maria Corina Machado is determined to become the country’s leader again and is promising to usher in “a new era” in Venezuela in hopes of convincing major foreign oil companies to invest in her country.
Machado gave the keynote address last week at CERAWeek, an energy conference with 10,000 attendees in Houston. He presented a five-point plan to revive oil production with the goal of reaching five million barrels per day, which also included a promise of 25-year leases to foreign investors and complete privatization of the oil and natural gas industry.
Machado said, “(If elected) the Venezuelan state will get out of the way and pave the way for conditions that will allow the oil and gas sector in Venezuela to be completely privatized.”
“The role of the state will be strictly as a regulator, creating incentives for long-term investment,” he said, noting the need for clear rules and enforceable contracts.
For the immediate future, the Canadian oilpatch shouldn’t be worried, said Colin Gruening, Enbridge executive vice-president.
“It’s uncertain how much more Venezuela can produce. That’s the first question. And the second question is, where will that oil then go?” He said.
