US President Donald Trump once declared that US oil companies would spend about 100 billion USD to invest in Venezuela after the US arrested President Nicolas Maduro.
However, at the White House event, Exxon Mobil CEO Darren Woods publicly stated that it is difficult to invest in Venezuela.
This shows the deadlock between the parties. Mr. Trump wants low oil prices. Leaders of large oil and gas corporations want higher oil prices. Mr. Trump wants businesses to invest heavily, while businesses prioritize tightening spending, reducing risks, and focusing on paying dividends and buying back shares to please shareholders.
To resolve this situation, Mr. Trump will either have to offer incentives to encourage US oil and gas companies to invest in Venezuela or find ways to put pressure if oil and gas businesses continue to stand aside.
Venezuelan crude oil is very heavy and viscous like asphalt, and must be diluted to be transported through pipelines.
Even Venezuelan oil must be treated on the spot before being brought to oil refineries. The entire process requires investment costs of up to billions of USD.
Since 2022, when the Russia-Ukraine conflict broke out, world oil prices rose sharply, and large oil and gas corporations have begun to pay attention to higher-risk projects, longer capital recovery times, in areas with low oil exploitation costs, not in North America.
Exxon and Chevron have studied the possibility of participating in exploration packages in Libya. Last year, Chevron signed a principle agreement to develop Iraq's large-scale Nasiriyah oil field along with some other assets. Exxon is also conducting discussions with Iraq.
Even Iran has become a noteworthy destination for major oil and gas giants, for the first time since 1979. "If we can return to real production in Iran, this country's potential is unlimited" - said Mike Sommers, CEO of the US Petroleum Institute.
With Venezuela, in fact, there are still reasons why Western oil and gas corporations consider investing. Despite being heavy and containing a lot of sulfur, Venezuela's crude oil reserves are very large, have been carefully surveyed and part of the infrastructure has been formed. Investing in Venezuela can help oil and gas companies ensure abundant crude oil supplies for decades.
However, the challenges are still very large. Venezuela's oil production decreased by 64% in the period 2014-2024, showing that restoring and bringing the country's oil and gas industry back to international standards will be a long and slow process. Oil and gas companies do not want to "go too far on the risk curve" of projects, Mr. Mike Sommers said.
President Donald Trump wants oil companies to invest more heavily to pull crude oil prices down, thereby reducing domestic gasoline prices and possibly helping to improve voter support.
However, even ignoring the fact that projects being negotiated now take many years to produce results, Mr. Trump's desire still directly conflicts with the responsibility of oil and gas leaders to put shareholder interests first.
