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US President Donald Trump has called on 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 exploit its vast oil reserves.
Trump, in opening the meeting with oil industry executives on Friday, sought to assure them that they should not be skeptical about rapid investment and, in some cases, return to the South American country with a history of seizures of state assets as well as ongoing U.S. sanctions and current political uncertainty.
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“You have complete security,” Trump told the leaders. “You deal directly with us and you don’t deal with Venezuela at all. We don’t want you to deal 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 the government’s money. But they need the government’s protection.”
Trump welcomed oil executives to the White House after U.S. forces on Friday seized their fifth tanker in the past month, linked to Venezuelan oil. The action reflects the United States’ determination to fully control the export, refining and production of Venezuelan oil, 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, all of whom I will meet with today at the White House,” Trump said Friday in a pre-dawn social media post.
The White House said it invited oil executives from 17 companies, including Chevron, which still operates in Venezuela, as well as ExxonMobil and ConocoPhillips, both of which had oil projects in the country that were lost as part of a 2007 nationalization of private companies under former President Nicolas Maduro’s predecessor, Hugo Chavez.
“If we look at the construction and business frameworks in place today in Venezuela, it is impossible to invest today,” said Darren Woods, CEO of ExxonMobil. “So significant changes need to be made to these business frameworks, to the legal system, there need to be sustainable investment protections and there need to be changes to the hydrocarbon laws in the country. »
Benjamin Radd, a senior fellow at UCLA’s Burkle Center for International Relations, told Al Jazeera he had “noted the hesitancy and unenthusiastic enthusiasm about re-entering the Venezuelan market,” citing Woods, who told the gathering that the company’s assets there had already been seized twice.
“The bottom line is that until Trump can outline and provide assurance of a plan to ensure political stability, reengaging these oil companies with Venezuela will remain a risky business. And what about a regime change in Iran in the coming days, weeks, or months, and all of a sudden it reemerges as a place where Western oil companies can do business? Even if the reserves don’t match Venezuela’s, the risk is much smaller and the infrastructure is stronger,” Radd said.
Other companies invited included Halliburton, Valero, Marathon, Shell, Singapore-based Trafigura, Italy-based Eni and Spain-based Repsol, as well as a wide range of national and international companies with interests ranging from construction to commodity markets.
Wait-and-see attitude
Major U.S. oil companies have so far largely refrained from asserting investments in Venezuela because contracts and guarantees must be in place. Trump suggested the United States would help support any investment.
Venezuela’s oil production has fallen below 1 million barrels per day (bpd). Part of Trump’s challenge in reversing the trend will be convincing oil companies that his administration has a stable relationship with Venezuela’s interim president, Delcy Rodriguez, as well as protections for companies entering the market.
While Rodriguez has publicly denounced Trump and Maduro’s kidnapping and ouster, the US president said that until now Venezuela’s interim leader had cooperated behind the scenes with his administration.
Most companies are in a wait-and-see attitude, waiting for Venezuelans’ conditions, stability and waiting to find out how much the U.S. government will actually help them, said Rachel Ziemba, deputy senior fellow at the Center for a New American Security.
Those like Chevron that are already there are in a better position to increase investments because they “have already lost costs,” Ziemba pointed out.
Ziemba said she expects a partial acceleration in the first half of this year as volumes destined for China – the largest buyer of Venezuelan oil – will be redirected and sold through the United States. “But long-term investment will be slow,” she said as companies wait to hear about U.S. commitments and Venezuelan conditions.
Tyson Slocum, energy program director at consumer advocacy group Public Citizen, criticized the rally and called the U.S. military’s removal of Maduro “violent imperialism.” Slocum added that Trump’s goal appears to be to “put billionaires in control of Venezuelan oil.”
So far, the U.S. government has not specified how revenues from the sale of Venezuelan oil would be shared or what percentage of sales would be returned to Caracas.
Ziemba expressed concern that “if funds do not go to Venezuela for basic products, among other local needs, there will be instability that will make the situation worse.” the country’s economic crisis“.
At Friday’s press conference, Trump said the United States has a formula for distribute payments. UCLA’s Radd said that “if the United States can or wants to provide security and stability, it makes sense that it would expect a return on investment in that sense. But this looks more like a mafia ‘racket’ than a government-led operation,” he told Al Jazeera.
Meanwhile, the U.S. and Venezuelan governments said Friday that they explore the possibility of reestablishing diplomatic relations between the two countries, and a delegation from the Trump administration arrived in the South American nation on Friday.
