Exxon may return to Venezuela and end long dispute with country leaders
The largest energy company in the United States, Exxon Mobil, is in negotiations to acquire oil production rights in Venezuela nearly two decades after it was effectively expelled from the country, according to several people familiar with the matter.
The deal would be a major victory for President Donald Trump, who has declared Venezuela’s vast natural wealth open to American companies.
If completed, the deal would mark Exxon’s return to a country with one of the world’s largest oil reserves, after years of legal disputes that turned the oil company into a declared enemy of the ruling Socialist Party.
Until January of this year, Exxon itself classified Venezuela as “uninvestable”.
After deposing the country’s leader, Nicolás Maduro, Trump placed his then vice-president in charge of Venezuela’s economic opening to the United States.
The deal, which could be reached and announced as early as this month, would involve signing contracts for Exxon to produce oil in up to six fields in different regions of Venezuela, according to these people. They spoke on condition of anonymity because they were not authorized to comment on private negotiations.
An Exxon spokesperson declined to comment. The Venezuelan government and the state-owned oil company also did not respond to requests for a position.
Any agreement between these two old adversaries in the global oil industry — Exxon and the government of Venezuela — would be a milestone in Rodríguez and Trump’s campaign to transform the country into an economic partner of the United States, after decades of rivalry.
Venezuela has nationalized foreign oil projects on two occasions in recent decades, including Exxon’s own assets.
An agreement would also represent a shift in the company’s position in relation to a country in which it began operating in the 1940s.
In 2007, Maduro’s predecessor as President, Hugo Chávez, nationalized oil projects by Exxon and other foreign oil companies. Unlike most of its competitors, Exxon refused to negotiate, left the country and began a long legal battle in international courts. The Venezuelan government still owes the company around US$1 billion in compensation awarded in these lawsuits.
After leaving Venezuela, Exxon began investing heavily in neighboring and rival Guyana and developing large oil fields in an area of the Atlantic claimed by Venezuelans.
Exxon’s economic weight in Guyana made the company a frequent target of attacks by Maduro, who accused it of sponsoring a hostile government.
In recent years, Exxon executives have rebuffed attempts by Rodríguez — who ran Venezuela’s oil sector under Maduro — to lure the company back to the country, according to a person familiar with those advances.
In a high-profile meeting with industry executives on January 9, six days after Maduro’s ouster, the Exxon CEO told Trump that Venezuela represented a major business risk.
“We’ve already had our assets confiscated there twice, so you can imagine that to get it back a third time would require quite significant changes,” said Darren Woods at the time.
He has since softened his speech.
Woods told analysts on a conference call this month that the company’s experience producing ultra-heavy oil in Canada gives it an advantage in Venezuela, where much of the oil has similar characteristics.
“Investments and returns look promising,” he said of Venezuela. “So I’m optimistic about what’s happening, the opportunity there.”
Some factors have changed since Woods ruled out Venezuela in January.
The war in Iran has raised global oil and gas prices, making investments in production in different markets more attractive. The turmoil in the Middle East also gave urgency to oil companies’ plans to diversify their production sources.
And last month, Exxon’s main rival, Chevron, announced a major expansion of its largest field in Venezuela, a move that is expected to cement the company’s dominance over one of the world’s largest oil deposits. Several analysts said Chevron’s expansion made it strategically more costly for Exxon to continue ignoring Venezuela.
It is not yet clear whether the initial agreement being negotiated between Exxon and Venezuelan authorities will include binding obligations or whether it will simply be a formal expression of the company’s interest. Rodríguez reformed the country’s oil law in January to make it more attractive to private investors, but is still finalizing a new type of contract for producers.
A person familiar with the talks said Exxon negotiators have been moving aggressively in the country in recent weeks, prioritizing a large entry over incremental deals. A second source said that a group of company employees traveled to Caracas in April to evaluate the oil fields on the table.
Rodríguez’s government has pursued the deal with similar urgency, according to a third person. For her, the return of a company that, in the popular imagination, symbolizes American oil power is a central piece of Rodríguez’s strategy to attract investment and gain prestige with the Trump administration.
The search for the Exxon deal has become a top priority, leaving behind the advancement of domestic laws on oil investments or attracting other major Western energy companies, this source added.
