Exxon Mobil is negotiating a deal to produce oil in Venezuela nearly two decades after the company was forced to leave the South American country due to its socialist leadership.
In 2007, Exxon exited the nation after former Venezuelan President Hugo Chavez nationalized foreign-owned oil projects. The country has one of the world’s largest oil reserves, a key reason why President Donald Trump has prioritized its economic reopening since ousting former Venezuelan dictator Nicolas Maduro in January.
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The Exxon-Venezuela deal still has to be finalized, though the New York Times reported an announcement could be made as soon as this month. An agreement would mark a major win for Trump.
Exxon, the largest U.S. oil company with a market capitalization of over $600 billion, has been more open to rekindling ties with Venezuela in light of the Iran war and surging oil prices.
Exxon CEO Darren Woods was initially hesitant to do business with the country again. “We’ve had our assets seized there twice, and so you can imagine to reenter a third time would require some pretty significant changes,” he told Trump at a White House meeting in January, days after Maduro’s capture. “Today, it’s uninvestable.”
Despite his reluctance to reenter the country, Woods remained open to holding talks with Venezuelan officials. A group of Exxon employees visited Caracas, the capital, in April to evaluate the oil fields being offered, according to the New York Times.
Speaking on the company’s first-quarter earnings call earlier this month, Woods sounded optimistic about restarting oil production in Venezuela. He explained Exxon has the experience to produce oil in Venezuela because its oil is similarly heavy to the oil that the company produces in Canada.
“The investment and the returns look promising,” Woods said. “And so I feel positive about what’s happening, the opportunity there. More work to do, but I think we’ll be uniquely positioned and play an important role in bringing those barrels to market.”
Acting Venezuelan President Delcy Rodriguez ran the country’s oil industry under Maduro. She now has the opportunity to reverse the past two decades of hostility with U.S. energy companies. Rodriguez is said to be aggressively pushing for the deal with Exxon.
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Earlier this year, the acting president took the first step toward privatizing the nation’s oil sector to lure foreign investors. The law appears to be working now that Exxon is in negotiations.
Chevron is the only major U.S. energy company operating in Venezuela at this time. It was also the only oil company to stay in Venezuela in 2007 as Chavez nationalized the country’s oil industry. Chevron announced an expansion of its largest oil field in Venezuela last month, placing pressure on Exxon to return to the South American nation and compete with its main rival.
