Despite Donald Trump's statements about the willingness of American companies to invest large amounts of money in Venezuela's oil industry, in reality this country remains extremely unattractive for investors.
Points of attention
- US oil giants are wary of investing in Venezuela due to instability and past experiences with asset confiscation, making the country unattractive for investors.
- The legal and commercial structures in Venezuela are deemed non-investment friendly, requiring significant changes to guarantee strong investment protection.
- Despite some oil companies expressing willingness to invest, American investors, including CEO of ExxonMobil, remain skeptical about injecting funds into the unstable Venezuelan oil industry.
US oil giants do not consider Venezuela attractive for investment
Darren Woods, CEO of the largest American oil company, ExxonMobil, expressed skepticism about investments in Venezuela during a video conference of energy company executives at the White House on January 9.
"If we look at the legal and commercial structures, the frameworks that are in place in Venezuela today, it is non-investment friendly today," Woods told Trump at this meeting.
According to him, significant changes are needed in the country's legal system to guarantee "strong investment protection."
Woods recalled that the Venezuelan government had already confiscated his company's assets twice since it first invested in the country in the 1940s.
Executives from other oil companies who participated in the White House video conference were more receptive to Trump's proposals.
Thus, Chevron representatives stated that they could increase oil production in Venezuela by 50% within 18-24 months by expanding their existing capacity.
Shell has announced its willingness to invest "several billions of dollars" provided that the US lifts sanctions on the Venezuelan oil industry.
Spain's Repsol has said it could triple its production within two to three years. Eni has also expressed its willingness to expand production.
However, in private conversations, American investors are not really eager to invest in unstable Venezuela.
"No one wants to go there when a random damn tweet can change the entire foreign policy of the country," an unnamed private investor told the Financial Times, alluding to Trump's loud statements on social media that constantly send stock markets into a fever.
Although Venezuela has the world's largest oil reserves (over 300 billion barrels), its industry has been devastated by politicization, nationalizations, layoffs, corruption, and sanctions.
The specifics of Venezuelan oil itself are problematic — it is an ultra-heavy grade that requires complex processing, stable infrastructure, and high costs. Venezuela will return to its "pre-socialist" production volumes in 10 years at best. Therefore, a quick "oil miracle" and the ousting of Russia from the market are currently unlikely.
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