President Donald Trump promised a group of major oil and gas firm executives assembled at the White House that he would provide them security to increase drilling operations in Venezuela, in an effort to continue lowering oil prices in the United States.
Trump, alongside Secretary of State Marco Rubio, Interior Secretary Doug Burgum, and Energy Secretary Chris Wright, met with executives from U.S. oil majors Chevron, Exxon Mobil, and ConocoPhillips.
Other firms represented in the meeting were Continental, Halliburton, HKN, Valero, Marathon, Shell, Trafigura, Vitol Americas, Repsol, Eni, Aspect Holdings, Tallgrass, Raisa Energy, and Hilcorp, the Washington Examiner confirmed.
At the top of the meeting, Trump said the administration would “cut a deal” with the companies to give them “total safety, total security” in order to operate in the country.
“One of the reasons you couldn’t go in is you had no guarantees, you had no security,” Trump said. “But now you have total security. It’s a whole different Venezuela.”
The president did not explain what those security guarantees would look like but said the U.S. would work with Venezuelan leaders to expand security measures.
He said that if companies move to expand existing or new operations, they will deal directly with the U.S. government, not Venezuela.
“We don’t want you to deal with Venezuela,” he said.
While Trump acknowledged that these companies will need “government protection” and “government security,” he said they will not need “government money.”
“The plan is for them to spend, meaning our giant oil companies, will be spending at least $100 billion of their money, not the government’s money,” Trump said.
He added: “When they spend all this money, it’s going to be there so they get their money back and make a very nice return.”
Venezuela’s oil reserves played a significant role in Trump’s decision to capture former Venezuelan dictator Nicolas Maduro last weekend, with the president himself saying the removal of Maduro opens the opportunity for increased U.S. investment.
Venezuela is estimated to have the largest oil reserves in the world, around 300 billion barrels. The country extracts fewer than a million barrels of oil per day, however, less than one-tenth of the top producers in the world.
The Trump administration has said that the U.S. oil industry could quickly increase these production levels, potentially by 50% within the next 12 to 18 months.
“We’re going to do this very quickly, we can have this done almost immediately,” Trump said Friday.
Major oil companies, though, had been publicly silent all week. Friday’s meeting marked the first time that major oil executives have publicly acknowledged interest in operating in the country.
“As a depletion business, the biggest challenge we have is finding resources,” said Darren Woods, the CEO of Exxon Mobil, which has not operated in Venezuela in nearly 20 years. “There’s an opportunity in Venezuela with all the resources there.”
Chevron, the only U.S. oil company currently operating in the country, also told the administration that it is “committed” to Venezuela’s present and future.
Chevron Vice Chairman Mark Nelson initially stopped short of committing to expanding operations but later said the company has a pathway to increase its production by about 50% in the next 18 to 24 months by leveraging wells that are already drilled.
Ahead of the meeting, a lobbyist familiar with the discussions told the Washington Examiner that there was a clear disconnect between the administration’s desire to expand U.S. operations in Venezuela and Big Oil’s interest and ability to do so in the White House’s proposed timeline.
“There’s a lot of concerns, and there seems to be a disconnect in the expectations of both interest in returning to Venezuela and in the timing, in the practicalities that it would take in order to accomplish the objectives of increasing Venezuelan production,” the lobbyist said.
There is widespread agreement that, outside of lifting sanctions and the blockade, the administration can do very little over the span of a couple of days or even weeks to facilitate increased investments.
Most, if not all, the major firms still have lingering questions about return on investment, commercial agreements, political stability, financial backing, and even basic physical safety.
Woods pointed to some of these concerns on Friday, saying to re-enter the country a third time “would require some pretty significant changes from what we’ve historically seen here and what is currently the state.”
“If we look at the legal and commercial constructs and frameworks in place today in Venezuela today, it’s uninvestible. And so significant changes have to be made to those commercial frameworks, the legal system,” Woods said. “There has to be durable investment protections, and there has to be change to the hydrocarbon laws in the country. We’re confident that with this administration and President Trump working hand in hand with the Venezuelan government, that those changes can be put in place.”
The Exxon CEO later said there are “a number of legal and commercial frameworks” that have to be established before the company can assess investing.
“The questions will ultimately be, how durable are the protections from a financial standpoint? What are the returns look like? What are the commercial arrangements, the legal frameworks?” Woods said. “All those things have to be put in place in order to make a decision, to understand what your return would be over the next several decades, that these billion-dollar investments will be made on.”
Trump teased some of these assurances earlier in the week, saying oil companies would be “reimbursed” for their investments.
However, he reversed course on that promise during the meeting, saying the oil majors do not need “government money.”
Industry sources estimate that it will take tens of billions of dollars to revitalize U.S. drilling operations in Venezuela, as only one company, Chevron, has been operating in the country for the last few decades.
Trump took those estimates further early Friday morning, claiming on social media that “BIG OIL” would be investing “at least 100 billion dollars” to rebuild Venezuela’s oil and gas infrastructure.
Trump’s efforts to increase U.S. drilling in Venezuela are tied to his own promise to lower oil prices and further drop prices at the pump, as domestic drillers have been unable to pursue new drilling under existing market conditions.
WHAT OIL COMPANIES NEED TO FULFILL TRUMP CALL TO REVITALIZE VENEZUELA’S INDUSTRY
Sources familiar with the matter told the Wall Street Journal that the president has told aides in the White House he believes U.S. domination over the Venezuela oil market can bring oil prices to around $50 a barrel.
Oil and gas executives have repeatedly warned that oil will need to sell around $70 and $75 per barrel to pursue new drilling opportunities.
