US President Donald Trump met with oil executives in Washington on Friday, as he pushed for major investments in Venezuela.
But no major financial commitments immediately emerged from the meeting, with the head of ExxonMobil warning that the South American country is currently “not investing”.
Trump said he expected major oil companies to direct “at least” $100bn (£75bn) towards the country, but industry analysts warned many companies would be reluctant to go into such a high-risk situation.
Last week the US arrested the Venezuelan leader Nicolás Maduro, who is currently imprisoned in New York.
Maduro’s second-in-command, vice president Delcy Rodríguez, who is seen as more of a pragmatist, is now interim president.
The executives of the largest US oil majors who attended the meeting acknowledged that the country, which sits on vast proven oil reserves, represents a great opportunity.
But in a press conference with Trump they warned that they need to see significant changes within Venezuela, as well as a welcome from the local government and its people, to make it an attractive place to put money.
“We’ve gotten our assets out there twice and to imagine getting in again a third time would require some significant changes from what we’ve seen historically and what the current state is,” said Exxon chief executive Darren Woods. “Now it’s not investing.”
Venezuela has had a complicated relationship with international oil companies since oil was discovered on its territory more than 100 years ago.
Chevron is the last remaining major American oil company still operating in the country, while several companies from other countries, including Repsol of Spain and Eni of Italy, were both represented at the White House meeting.
Exxon and ConocoPhillips, which also attended, are fighting to recover billions of dollars they say they are owed after the 2007 nationalization of their assets.
Trump has revisited the issue this week to justify his intervention, including on Friday, but he downplayed the chances of recovery at the meeting, echoing comments by other administration officials in recent years who have said paying off the debt is not an urgent priority.
“We’re not going back,” Trump said. He said his administration will work to make a “deal” with companies to bring his vision for the revival of the industry to reality.
Venezuela sits atop some of the world’s largest reserves.
But its production has fallen sharply in recent decades due to disinvestment and mismanagement – not to mention US sanctions, which limit its access to the global market.
At roughly 1 million barrels per day, the country’s production now accounts for less than 1% of global supply.
The White House has said it is working “selectively” to restore the restrictions, but Trump officials have also made it clear they want to control the sale of Venezuelan oil, as a way to maintain leverage over the Venezuelan government.
The US this week seized several oil tankers carrying sanctioned crude. US officials say they are working to establish a sales process, which will deposit the proceeds into accounts controlled by the US.
“We are open for business,” Trump said.
Chevron said it expected output to stabilize, building on its current presence, while Exxon said it was working to send a technical team to assess the situation in the coming weeks.
Repsol, which currently boasts output of around 45,000 barrels per day, says it sees a path to triple its production in Venezuela in the next few years under the right conditions.
Executives at other companies also said Trump’s promises of change would spur investment and they hoped to seize the opportunity.
“We’re ready to go to Venezuela,” said Bill Armstrong, who heads an independent oil and gas driller. “In real estate terms, this is prime real estate.”
But analysts say that meaningfully increasing production will take a lot of effort.
“They are as respectful as humanly possible, and as supportive as they can be, without making real dollars,” said David Goldwyn, president of energy consultancy Goldwyn Global Strategies and former US State Department special envoy for international energy affairs.
Big oil companies like Exxon and Shell “can’t invest in a single digit billion dollars, let alone tens of billions of dollars”, without physical security, legal security and a competitive fiscal framework, said Goldwyn.
“It’s not really accepted from an industry point of view,” he said. “The conditions are not right.”
However, he added that smaller companies may be more willing to jump in and help boost Venezuela’s oil production next year. But those investments are likely to hover in the $50m range – a far cry from the “fantastic” $100bn figure floated by Trump.
Rystad Energy estimates it will take $8bn to $9bn in new investments annually to triple production by 2040.
Trump’s proposed $100bn investment in Venezuela could have a big impact – if it happens, says the company’s chief economist, Claudio Galimberti.
He says companies are likely to invest on that scale with subsidies — and political stability.
“It’s going to be difficult to see major commitments before we have a completely stable political situation and it’s anyone’s guess when that will happen,” he said.
Additional reporting by Danielle Kaye