US oil giants have so far remained silent on Donald Trump’s claim that they are primed to spend “billions and billions of dollars” rebuilding the Venezuelan oil industry following the ouster of Nicolás Maduro.
Chevron, the only US oil company still operating in Venezuela, committed only to following “relevant laws and regulations” after the US president suggested American energy multinationals would be central to his plans for the country.
Venezuela’s vast oil reserves – reputedly the world’s largest – will be modernized and exploited, Trump claimed in interviews and a press conference at his Mar-a-Lago estate. US oil firms will invest heavily to reconstruct “rotted” infrastructure, ramp up production and sell “large amounts … to other countries”, he told reporters, adding: “We’re in the oil business.”
“We’re going to have our very large United States oil companies – the biggest anywhere in the world – go in, spend billions of dollars, fix the badly broken infrastructure and start making money for the country,” the president said. The firms would be “reimbursed”, he added, without providing more detail.
ExxonMobil, the biggest US oil company, did not respond to a request for comment. ConocoPhillips, another major player, said it was monitoring developments, and added: “It would be premature to speculate on any future business activities or investments.”
A spokesperson for Chevron said: “Chevron remains focused on the safety and wellbeing of our employees, as well as the integrity of our assets. We continue to operate in full compliance with all relevant laws and regulations.”
Venezuela moved to nationalize its oil industry some 50 years ago, and later seized control of operations still run under private arrangements in 2007. While Chevron agreed to remain, others including ExxonMobil and ConocoPhillips refused to accept new terms.
ExxonMobil and ConocoPhillips engaged in a years-long legal battle with Venezuela after exiting, and were ultimately awarded billions of dollars by the World Bank’s International Center for Settlement of Investment Disputes. But Venezuela, with an economy battered by sanctions, mismanagement and corruption, has yet to pay all the money.
For now, a US embargo on all Venezuelan oil remains in full effect, according to Trump, whose administration has repeatedly accused the country of stealing American wealth and property by seizing control of the reserves. As the US moves to take them back, its next steps will be closely scrutinized amid questions over the legality of Trump’s vision.
Trump’s suggestion that US oil majors would play a key role in Venezuela prompted analysts to conclude their executives had likely been consulted ahead of time.
“My hunch is that, if President Trump said this publicly, probably there was already an agreement with the US companies,” Jorge León, head of geopolitical analysis at Rystad Energy, an industry consultancy, said. Tina Fordham, a geopolitical strategist and consultant, said: “One assumes that they have been part of the conversation.”
The White House did not comment on whether it consulted US oil giants before the strike.
Administration officials have in recent weeks told US oil executives that, if they want compensation for rigs, pipelines and other seized property in Venezuela, they must return and invest heavily, according to Politico, which cited two unnamed sources familiar with the conversations.
Venezuela holds some 17% of global oil reserves, according to the Energy Institute. But its output, as high as 3.5m barrels per day in the 1970s, fell dramatically due to decades of mismanagement, corruption and underinvestment. Production from Venezuela was around 1.m barrels per day, around 1% of the world’s output, last year.
Taking production in the country back to anywhere near its previous levels is widely expected to require huge investment. Returning to 2m barrels per day by the early 2030s would require an estimated $110bn, according to Rystad.
“I don’t think companies will rush back into the country,” said León, who suggested it would be “very, very tricky” for Venezuela to attract the private investment required to dramatically increase oil production.
He added: “Companies, before rushing back into the country, will want to see the country is stable enough. The fact this industry was nationalized by [Hugo] Chávez a few years ago, that remains in the back of their minds. They will really want to see things improving.”
The global oil market is “entering into a period of oversupply”, said León. “Prices will come down and will continue to come down … That means that oil companies will be very, very selective of where they invest, in a period of lower prices. Given the choice, they will probably want to go investing in places they already know.”
But other industry observers expect oil majors to jostle for a chance to operate in Venezuela. The country now amounts to “a huge opportunity” for big firms, said Fordham, founder of Fordham Global Foresight. “There will be immense competition between them for the best opportunities.”
On Saturday morning, Trump hailed “one of the most stunning, effective and powerful displays of American military, might and competence” in history.
But in corporate boardrooms and beyond, memories of other toppled dictators – including in Afghanistan, Iraq and Libya – where the aftermath proved complicated, loom large.
“The history of post-authoritarian transitions, whether they are organic or externally brought about, is long and non-linear,” said Fordham. “Trump appears to have complete faith that, under him, things will be different.”