US oil companies have long hoped to recover the assets that Venezuela’s authoritarian regime wrested from them decades ago.
Now, the Trump administration is offering to help them achieve that goal — with one major condition.
Administration officials have told oil executives in recent weeks that if they want compensation for their rigs, pipelines and other seized property, then they must be prepared to return to Venezuela now and invest heavily in reviving the devastated oil industry, two people familiar with the administration’s activities told POLITICO on Saturday. The outlook for Venezuela’s destroyed oil infrastructure is one of the major questions after the US military crackdown that captured leader Nicolás Maduro.
But industry insiders said the administration’s message still left them angry about the difficulty of rebuilding degraded oil fields in a country where it’s not even clear who will lead the country in the near future.
“They’re saying, ‘You have to come in if you want to play and get reimbursed,'” said an industry official familiar with the conversations.
The offer has been on the table for the past 10 days, the person said. “But the infrastructure there is so degraded that none of these companies can adequately assess what is needed to make it operational.”
President Donald Trump suggested in a televised address early Saturday that he fully expects U.S. oil companies to pour big money into Venezuela.
“We’re going to have our very big oil companies in the United States, the biggest in the entire world, come in, spend billions of dollars, fix the badly damaged infrastructure, the oil infrastructure, and start making money for the country,” Trump said as he celebrated Maduro’s capture.
It has been five decades since the Venezuelan government first nationalized the oil industry and nearly 20 years since former President Hugo Chávez expanded asset seizures. The country has some of the world’s largest oil reserves, but its oil infrastructure has deteriorated amid years of mismanagement and poor investment.
Initial thoughts from U.S. oil industry officials and market analysts who spoke to POLITICO about a post-Maduro Venezuela focused more on questions than answers.
The administration has not yet determined what its long-term plan looks like, or even if it has one, said Bob McNally, a former national security and energy adviser to President George W. Bush who now runs the energy and geopolitical consulting firm Rapidan Energy Group.
“It’s not clear that there was a specific plan beyond the main decision that in a post-Maduro regime, according to Trump, American companies — energy and otherwise — would be at the top of the list” to re-enter the country, McNally said. He added: “What the regime looks like, what the plans are to get there, that hasn’t been fully fleshed out yet.”
A central concern for U.S. industry executives is whether the administration can guarantee the safety of the workers and equipment companies are expected to send to Venezuela, how the companies will be paid, whether oil prices will rise enough to make Venezuelan crude profitable and Venezuela’s membership in the OPEC oil exporting cartel. Benchmark US oil prices were at $57 a barrel, the lowest since the end of the pandemic, at the market close on Friday.
The White House did not immediately respond to questions about his plan for the oil industry, but Trump said during an appearance at his Mar-a-Lago estate in Florida on Saturday that he expected oil companies to make the initial investments.
“We’re going to rebuild the oil infrastructure, which requires billions of dollars that will be paid for directly by the oil companies,” Trump said. “They will be reimbursed for what they do, but it will be paid and we will keep the oil flowing.”
However, the administration’s outreach to U.S. oil company executives remains “at best in its early stages,” said an industry executive familiar with the discussions, who spoke on condition of anonymity to describe conversations with the president’s team.
“In the run-up to regime change, there was a commitment. But it was sporadic and relatively poorly received by the industry,” this person said. “It feels very much like a target practice ready to shoot.”
Venezuela’s oil production has fallen to less than a third of the 3.5 million barrels a day it produced in the 1970s, and the infrastructure that is used to tap its 300 billion barrels of reserves has deteriorated over the past two decades.
“Will the US be able to attract US oil services to go to Venezuela?” asked the executive. “Maybe. It should involve service companies being able to contract directly with the US government.”
Discussions with administration officials in recent days also involved the fate of the state oil company, known as PdVSA, this person added.
“The PdVSA will not be denationalized in any way and broken up,” this person said. “There will certainly be a wholesale reshuffle of PdVSA’s management, but at least at the moment, there is no plan for denationalisation or auction. It is in the best position to maintain the production flow.”
Chevron, the only major oil company still operating in Venezuela under a special license from the US government, said in a statement Saturday that it “remains focused on the safety and well-being of our employees and the integrity of our assets.
“We continue to operate in full compliance with all relevant laws and regulations,” Chevron spokesman Bill Turenne said in a statement.
Evanan Romero, a Houston oil consultant involved in the effort to bring U.S. oil producers back to Venezuela, said in a text message that Saturday’s events set the stage for U.S. oil companies to return “very soon.”
Romero is part of a committee of about 400 people, mostly former employees of Venezuela’s state oil company Petróleos de Venezuela, that was formed about a year ago to strategize how to revive the country’s oil industry under a new government.
The committee, which is not directly affiliated with opposition leader María Corina Machado’s camp, is debating the role any new government should play in the oil sector. Some members favor keeping the industry under government control, while others argue that international oil majors will only return to a free market system, Romero said.
Ultimately, “order” in any transition will determine U.S. investment and re-entry into Venezuela, said Carrie Filipetti, who served as assistant secretary for Cuba and Venezuela and deputy special representative for Venezuela at the State Department in the first Trump administration.
“If you were to see a messy transition, obviously, I think it would be challenging for American companies to go into Venezuela,” said Filipetti, who is now executive director of the nonpartisan foreign policy group The Vandenberg Coalition. “It’s not just about getting rid of Maduro. It’s about making sure the legitimate opposition comes to power.”
Richard Goldberg, who led the White House’s National Energy Dominance Council until August, said the Trump administration could offer financial incentives to coax companies back to Venezuela. These could include the Export-Import Bank and the US International Development Finance Corp., whose powers Congress expanded in December underwriting investments to account for political and security risks.
Promoting U.S. investment in Venezuela would keep China — a big consumer of Venezuela’s oil — out of the nation and cut off the flow of cheap crude that China buys from ghost fleets of Venezuelan oil tankers that evade U.S. sanctions.
“There’s an incentive for Americans to get there first and make sure it’s American companies leading the way, and not anybody else’s,” Goldberg said.
It’s unclear how much the Trump administration might accelerate investment in Venezuela, said Landon Derentz, an energy analyst at the Atlantic Council who served in the Obama, Trump and Biden administrations.
Many see Venezuela as a long-term play, given current low $50-a-barrel oil prices and the huge capital investment required to upgrade infrastructure, Derentz said. But as the U.S. shale oil regions that made the country the world’s top oil producer disappear over time, he said, it will become increasingly economical to export heavy Venezuelan crude to Gulf Coast refineries built specifically to process it.
“Venezuela would be a crown jewel if the above-ground risk is removed. I have companies saying let’s see where this goes,” said Derentz, who served on Trump’s National Security Council during his first term. “I don’t see anything that gives me the feeling that this is a good opportunity.”
