United States President Donald Trump has urged oil executives to return to Venezuela as the White House seeks to quickly secure $100 billion in investment to revive the country’s ability to fully tap into its vast petroleum reserves.
Trump, opening a meeting with oil industry executives on Friday, sought to reassure them that they need not rush to invest and, in some cases, return to the South American country with a history of state asset seizures, as well as ongoing US sanctions and ongoing political uncertainty.
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“You have full security,” Trump told officials. “You’re dealing directly with us and not dealing with Venezuela at all. We don’t want you dealing with Venezuela.”
Trump added: “Our giant oil companies will spend at least $100 billion of their money, not the government’s money. They don’t need government money. But they need government protection.”
Trump welcomed oil officials to the White House after the US military seized their fifth tanker in the past month linked to Venezuelan oil. The move showed US determination to fully control Venezuela’s petroleum exports, refining and production, a sign of the Trump administration’s plans for continued involvement in the sector as it seeks commitments from private companies.
“At least $100 billion will be invested by BIG OIL, who I will be meeting with at the White House today,” Trump said in a social media post on Friday.
The White House said it had invited oil executives from 17 companies, including Chevron, which still operates in Venezuela, as well as ExxonMobil and ConocoPhillips, which had oil projects in the country that were lost in 2007 as part of the nationalization of private businesses under former President Nicolas Maduro’s predecessor, Hugo Chavez.
“If we look at the business structure and framework that exists in Venezuela today, it is not investable today,” said Darren Woods, ExxonMobil CEO. “And so within that commercial framework, there will have to be significant changes to the legal system, there will have to be sustainable investment protections and there will have to be changes to the country’s hydrocarbon laws.”
Benjamin Rudd, a senior fellow at the UCLA Berkeley Center for International Relations, told Al Jazeera that he had “noted a reluctance and lack of enthusiasm to re-enter the Venezuelan market”, citing Woods, who told the gathering that the company’s assets had already been seized.
“The bottom line is that until Trump can outline and promise a plan for political stability, it’s going to be a risky endeavor for these oil companies to re-engage in Venezuela. And what’s going to change in Iran in the coming days or weeks or months and suddenly re-emerge as a place where Venezuelans can still do the same business. There’s a lot less, and the infrastructure is better,” Rad said.
Other companies invited included Halliburton, Valero, Marathon, Shell, Singapore-based Trafigura, Italy-based Eni and Spain-based Repsol, as well as domestic and international companies with interests ranging from construction to commodity markets.
Wait and see
Major US oil companies have so far refrained from confirming investments in Venezuela, saying contracts and guarantees must be in place. Trump has suggested the US will help block any investment.
Venezuela’s oil production has fallen below one million barrels per day (bpd). Part of Trump’s challenge is to convince oil companies that his administration has a stable relationship with Venezuela’s interim president, Delsey Rodriguez, as well as protections for companies entering the market.
While Rodriguez has publicly condemned the kidnapping and ouster of Trump and Maduro, the US president has said that to date Venezuela’s interim leader has been cooperating behind the scenes with his administration.
Most companies are in a wait-and-see mode as they wait to find out Venezuela’s conditions, stability and how much the U.S. government will actually help, said Rachel Zimba, adjunct senior fellow at the Center for a New American Security.
Those already there, such as Chevron, are in a better position to increase investment because they “already have costs down,” Zimba pointed out.
Zimba said she expects a partial ramp-up in the first half of this year as volumes destined for China – the biggest buyer of Venezuela’s oil – are redirected and sold via the US. “But long-term investment will be slow,” she said, as companies wait to find out about U.S. commitments and Venezuela’s terms.
Tyson Slocum, director of the consumer advocacy group Public Citizen Energy Program, criticized the gathering and called the U.S. military’s removal of Maduro “violent imperialism.” Slocum added that Trump’s goal appears to be “billionaire control of Venezuelan oil.”
So far, the US government has not said how the revenue from Venezuelan oil sales will be divided and what percentage of the sales will go to Caracas.
Zimba said she was worried that “if funds for basic goods, among other local needs, do not go to Venezuela, there will be instability that will lead to Economic crisis of the country“
In a press conference held on Friday, Trump said that America has a formula for this Disbursement of Payments. UCLA’s Radd said that “if the US can or will guarantee security and stability, then 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”, he told Al Jazeera.
Meanwhile, the US and Venezuelan governments said on Friday Exploring the possibility of restoring diplomatic relations between the two countries, and a delegation from the Trump administration arrived in the South American nation on Friday.