Trump Presses Oil Executives to Invest in Venezuela—but Gets Lukewarm Reception
Exxon CEO says the South American country is currently ‘uninvestable’ and plans to send a technical team to assess the situation on the ground
President Trump urged oil executives to invest in Venezuela, aiming for at least $100 billion in spending to boost oil production.
Oil executives, including Exxon and ConocoPhillips, require security guarantees and legal overhauls before committing to new investments in Venezuela.
WASHINGTON—President Trump pressed executives from nearly two dozen oil companies Friday to plant flags in Venezuela and drill into one of the world’s largest oil bounties. Most of those executives stopped short of making public pledges to quickly invest.
Gathering at the White House less than a week after the U.S. incursion in Venezuela, executives from Chevron CVX 1.80%increase; green up pointing triangle—the only U.S. oil company active there—Exxon XOM 1.38%increase; green up pointing triangle Mobil, ConocoPhillips COP -1.23%decrease; red down pointing triangle and other companies signaled a willingness to examine new prospects in the Latin American country. However, they indicated they need security guarantees and an overhaul of Venezuela’s legal and commercial framework to consider diving in.
Trump said the U.S. government would provide the companies with security guarantees, but it was clear he wanted companies to push into the country. At the start of the meeting, Trump said he intends American oil companies to spend at least $100 billion in Venezuela boosting oil production.
“If you don’t want to go in, just let me know because I’ve got 25 people that aren’t here today who are willing to take your place,” Trump told the executives. He also said the U.S. and Venezuela are “working well together” to rebuild the country’s oil-and-gas infrastructure.
The public part of the meeting, which was televised, featured cabinet members and oil executives sitting in a large horseshoe in the East Room of the White House. At the end, Trump asked the press to leave the room and said he would begin negotiating with the executives to strike a deal.
In the private portion of the meeting, executives from the big oil companies took a tone similar to their earlier assessments, according to people familiar with the matter.
The oil executives expressed public support for the idea that they could find plenty of valuable crude in the Latin American country, but noted significant hurdles preventing them from making immediate commitments.
Exxon CEO Darren Woods said Venezuela is currently uninvestable without significant changes to the country’s commercial frameworks, legal system and hydrocarbon laws. He expressed confidence those changes can be put in place with the Trump administration and Venezuelan government working together.
“We’ve had our assets seized there twice,” Woods said. “You can imagine to re-enter a third time would require some pretty significant changes from what we’ve historically seen here and what is currently the state.”
As the longer-term issues are being resolved, Woods said Exxon could have a technical team visit to assess the current state of Venezuelan assets within the next couple of weeks. Exxon first entered Venezuela in the 1940s but hasn’t been active there for almost two decades, he noted. He said Exxon could assist getting Venezuelan crude to market through its integrated businesses, which include refining and trading.
“It has to be a win-win-win proposition” for shareholders, for the government of Venezuela and for the people of the country, he said.
ConocoPhillips CEO Ryan Lance, meanwhile, noted his company is the largest nonsovereign credit holder in Venezuela today. Asked by Trump how much the firm had left behind in the country, Lance said it was $12 billion.
“We’re not gonna look at what people lost in the past because that was their fault,” Trump said, before adding, “You’re gonna make a lot of money, but we’re not going to go back.”
One of the questions swirling in the industry this week was whether Trump, as part of his plan to encourage them to return, would pledge to make whole Exxon and ConocoPhillips, which left the country in 2007 when Hugo Chávez nationalized their oil assets. The companies are still seeking to collect on most of those debts.
As for Chevron, Vice Chairman Mark Nelson thanked Trump for his leadership and for keeping American energy at the top of his agenda. He said the company has brought its production in Venezuela to 240,000 barrels a day at its four joint ventures and can boost output relatively quickly.
“I think we have a path forward here very shortly to be able to increase our liftings from those joint ventures 100% essentially effective immediately,” he said.
Nelson stood in for Chevron Chief Executive Mike Wirth who had a knee replacement earlier this week.
Trump opened the meeting by saying he wished his White House ballroom project had been completed in time to accommodate other oil-industry executives who wanted to attend Friday’s event. He added an apology to those the White House couldn’t accommodate.
Among those who did attend were some of Trump’s close oil-industry allies and donors such as billionaires Harold Hamm of Continental Resources and Jeff Hildebrand of Hilcorp.
Hamm, a staunch ally and wildcatter armed with private capital, expressed enthusiasm about the prospect of exploring in Venezuela but noted that the country has challenges and didn’t commit to investing there.
Hildebrand, who has amassed his fortune buying assets on the cheap, cutting costs and then squeezing out both oil and profit from wells, said Hilcorp is fully committed and ready to go rebuild the infrastructure in Venezuela.
Asked by Trump if Hilcorp would be going to Venezuela, he responded: “Yes.” It was one of the few explicit commitments made by an oil CEO whose company isn’t currently active in Venezuela.
Restoring Venezuela’s oil production to its former glory would likely require tens of billions of dollars, analysts say. Years of negligence, under investment, mismanagement and corruption have led to a dilapidation of oil-and-gas fields that would require a comprehensive overhaul of the country’s infrastructure.
Major investments in the country’s ailing oil sector would be far more likely and sustainable under a democratic government there, said Ricardo Hausmann, a former Venezuelan planning minister.
“The Trump team seems to be betting on an oil recovery before a transition. I think it should be the other way around. Rules of the game set up by a discredited Chavista regime at the barrel of a U.S. gun would have very little legitimacy for Venezuelans,” he said. “They would also need the human capital down there, but many Venezuelans with experience in the oil industry wouldn’t return unless there is a transition.”
The Trump administration is working on a plan to exert some control over Venezuela’s state-run oil giant, Petróleos de Venezuela, or PdVSA, including acquiring and marketing the bulk of its oil production, The Wall Street Journal reported this week. The president has raised the prospect of lowering oil prices to $50 a barrel—a level that would be too low for oil companies to profitably invest in Venezuela.
Others in attendance at the meeting, such as refinery operators Valero and Marathon Petroleum, would benefit from access to cheap Venezuelan crude that they can turn into fuel at their Gulf Coast facilities. Those refineries are designed to take heavy crude from Canada, Mexico and Venezuela.
“We have the ability and the capability of our assets to process Venezuelan crude and the people of Marathon Petroleum stand ready to do so,” said Maryann Mannen, the company’s CEO.