US Pushes Oil Majors to Invest Big in Venezuela If They Want to Recover Debts

US Oil Companies to Invest in Venezuela Under Trump Plan

US President Donald Trump has announced a new initiative where American oil companies will invest billions in Venezuela to restore its oil production after the removal of President Nicolás Maduro. Trump stated that major US oil firms would work to repair the country's oil infrastructure and boost its economy. Chevron is currently the only major US company operating in Venezuela, while Exxon Mobil and ConocoPhillips have historical ties to the region according to reports.

The Trump administration has communicated to oil executives that if they want compensation for assets expropriated by Venezuela, they must be prepared to invest heavily in reviving its petroleum industry. This message has left industry officials cautious due to the difficulty of rebuilding the country's oil infrastructure under uncertain leadership according to industry analysis.

Trump emphasized that US oil companies would be responsible for initial investments, with reimbursement promised after infrastructure is repaired. He expects these companies to play a leading role in reactivating Venezuela's oil sector, which has significant reserves but has suffered from years of underinvestment and mismanagement according to financial reports.

Why Did This Happen?

The move follows a dramatic US military operation that captured Maduro and his wife. Trump reiterated that American companies will fund the reconstruction of Venezuela's oil infrastructure directly, promising that they will be reimbursed for their efforts according to ABC News.

The US has maintained an embargo on Venezuelan oil, with Trump indicating that military forces would stay until American demands are met. This strategy is designed to ensure that US companies dominate the revitalization of Venezuela's energy sector according to Reuters.

What Are Analysts Watching Next?

Analysts noted that Trump's plan faces challenges due to inadequate infrastructure, which requires significant investment and time to develop. It may take tens of billions of dollars and at least a decade for improvements in the Venezuelan oil industry according to Seeking Alpha.

Chevron, the only major US oil firm still operating in Venezuela under a special license, emphasized its focus on employee safety and operating within legal regulations. However, companies like SLB, Baker Hughes, Halliburton, and Weatherford did not provide comments immediately according to the Wall Street Journal.

Industry executives are concerned about the safety of employees and equipment, the profitability of Venezuelan crude, and the country's future status in OPEC. With oil prices at $57 a barrel, the lowest since the end of the pandemic, the financial viability of the investment remains uncertain according to CNBC.

How Might This Affect the Market?

Venezuela, a founding member of OPEC, currently produces around 900,000 barrels per day, down from a peak of 3.5 million in the 1970s. If the US oil sector reenters the country, it could reroute oil exports back to the US and reduce reliance on Chinese refiners according to Reuters.

The US Gulf Coast refineries, which are optimized to process heavy-grade crude like that from Venezuela, could see a boost in operations if exports resume. This shift would benefit U.S. refiners and potentially reduce global oil prices according to Bloomberg.

India's ONGC Videsh Ltd, which jointly operates in Venezuela, could also see benefits if sanctions are eased. The company could recoup up to $1 billion in unpaid dividends and resume operations in the San Cristobal oilfield according to Economic Times.

Despite these potential gains, analysts caution that political instability and the need for infrastructure rebuilding make the investment risky. The Trump administration will need to provide clear long-term plans and guarantees for companies to commit significant capital according to Reuters.