President Donald Trump may have made a serious blunder concerning Venezuelan oil.
Trump expressed excitement at the prospect of American oil companies taking hold of Venezuela’s vast oil resources.
But industry sources tell CNN that U.S. oil executives are unlikely to rush into Venezuela for several reasons: the on-the-ground situation remains highly uncertain, Venezuela’s oil sector is in ruins, and Caracas has a history of seizing American oil assets.
Perhaps the greatest issue is that oil prices today are too low to justify spending the immense sums of money—perhaps tens of billions of dollars—that would be needed to revive Venezuela’s ailing oil industry.
“The appetite to jump into Venezuela right now is quite low. We have no idea what the government there will look like,” one well-informed industry source told CNN on Monday. “The president’s desire differs from the industry’s desire. And the White House would know that if they had consulted with the industry before Saturday’s operation.”
“All of our oil companies are eager and willing to make major investments in Venezuela to restore their oil infrastructure, destroyed by the illegitimate Maduro regime,” White House spokeswoman Taylor Rogers stated in a statement to CNN. “American oil companies will do an incredible job for the people of Venezuela and will represent the United States well.”
A senior White House official informed CNN that Energy Secretary Chris Wright and Secretary of State Marco Rubio will spearhead efforts to engage with the oil industry on Trump’s behalf. The official indicated that correspondence with oil companies has already commenced and will continue.
Wright will meet with oil industry executives this week to discuss the next steps for American companies concerning crude drilling in Venezuela, a Department of Energy spokesperson reported.
Two sources previously told CNN that while Trump officials reached out to American oil corporations to gauge interest in returning to Venezuela, energy firms are hesitant to commit to reinvesting there.
“Rhetoric Over Reality”
According to federal estimates, Venezuela holds more proven oil reserves than any other nation on the planet—more than Iraq, Russia, and the United States combined.
Nevertheless, when oil companies decide to commit capital to remote drilling ventures, they require assurance about what the operational environment will be like in years, if not decades. It is difficult these days to believe in certainty regarding governance and institutions in Venezuela within weeks, let alone years.
“Just because the reserves are there—even the world’s largest—doesn’t mean you will necessarily produce there,” another industry source advised CNN. “It’s not the same as launching a food truck.”
That source asserted that the Trump administration has put “rhetoric above reality” and stressed that political stability is of “paramount importance” when companies contemplate overseas investments.
“Venezuela is Broke”
Years of underinvestment, economic crisis, and international emigration have left Venezuela’s oil infrastructure decaying.
“Venezuela is broke. It has no money. The national oil company is a mess. It can barely feed its people,” said Luisa Palacios, a former Citgo chair born and raised in Venezuela.
Consulting firm Rystad Energy estimated in figures released Monday that it would require an investment of $100 billion to bring Venezuelan oil production back to its 1.1 million barrels per day level.
This enormous figure reflects not only Venezuela’s obsolete infrastructure but also the fact that a large portion of its crude is considered “heavy”—a type of crude that is more difficult and expensive to refine than the lighter oil found in West Texas’s Permian Basin.
$60 Oil Won’t Inspire Investment
Oil is cheap right now, too. Crude prices have dropped 20% over the last year—their lowest performance since 2020.
Cheap oil is excellent for consumers, driving gasoline prices to a four-year low. However, it is this low price environment that makes oil CEOs and their shareholders reluctant to take on risky projects.
“The notion that Venezuela’s oil industry will be revived overnight simply isn’t realistic. This is all very premature,” commented Doug Leggett, the managing director for integrated oil, refining, and E&P at Wolfe Research.
Admittedly, it is possible the Trump administration will attempt to overcome these hesitations by offering guarantees intended to spur American investment in Venezuela. It remains too early to tell if such incentives will be proffered.
Chevron Could Benefit
In any case, analysts and industry executives say few American oil companies possess the deep pockets and expertise required to advance production in Venezuela.
Chevron leads this list because the Houston-based firm is the only major Western oil giant that maintained a substantial presence in Venezuela throughout decades of turmoil.
Chevron is currently extracting about 150,000 barrels per day in Venezuela, operating under a sanctions license that the Trump administration recently extended, according to Rystad.
Chevron declined to comment on its interest in scaling up output in Venezuela subsequent to President Nicolás Maduro being supplanted.
Exxon and Conoco Owe Billions
ExxonMobil and ConocoPhillips, two other major U.S. oil corporations, also command the expertise and balance sheets to aid Venezuela’s revival.
Nonetheless, both firms may still carry scars from their prior experiences in Venezuela.
Former Venezuelan leader Hugo Chávez nationalized Exxon’s and Conoco’s oil assets around 2006. While Chevron opted to remain and work with Caracas, Exxon and Conoco departed, and their assets were seized.
Conoco is still seeking to recoup approximately $12 billion following the prior nationalization of its Venezuelan holdings, while ExxonMobil is aiming to recover nearly $2 billion, Reuters reports.
“Venezuela is the country with the most expropriation cases filed against it. That means the initial risk premium there is very high,” stated Palacios, the former Citgo executive who now serves as interim research director and managing director for energy transition finance at Columbia University’s Center on Global Energy Policy.
Exxon is focused on developing major oil discoveries in neighboring Guyana, which in a few short years transformed from virtually no oil output to surpassing Venezuela’s.
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