ExxonMobil has signed a memorandum of understanding (MOU) with Venezuela’s state oil company to assess upstream oil opportunities, marking a potential reentry into the South American country after Venezuela expropriated its assets nearly two decades ago.
“This memorandum is a meaningful first step, but any future investment would require stable policies, clear regulations, strong investment protections and competitive returns,” Exxon said on Nov. 9 after a signing ceremony.
The MOU with the state-owned Petróleos de Venezuela (PDVSA) is nonbinding and does not commit the U.S. multinational oil and gas corporation to any specific project.
ExxonMobil did not say which areas it was assessing or which projects it was interested in. Before the company can take part in exploration or production, it will need a final joint-venture or production-sharing contract.
Venezuelan interim President Delcy Rodríguez said at the signing ceremony that she welcomed ExxonMobil back and hoped the agreement would become a formal arrangement.
President Donald Trump has sought to reintegrate U.S. companies into Venezuela’s oil sector after American military forces captured Venezuelan leader Nicolás Maduro in January.
Venezuela holds the world’s largest proven oil reserves, estimated at 303 billion barrels. However, oil production declined under the Maduro regime because of mismanagement and underinvestment.
ExxonMobil Welcomed Back
According to the state-run Venezolana de Televisión (VTV), Minister of People’s Power for Hydrocarbons Paula Henao said that the agreement was important for both Venezuela and the United States.
“We are on the path to repeating our success story and increasing production in our fields and, of course, moving towards a complementary scheme where we can maximize those productive capacities with the technology that ExxonMobil will incorporate,” Henao said, making reference to heavy and extra-heavy crudes from the Orinoco Belt.
The Orinoco Belt is a vast region in central Venezuela that contains some of the world’s largest deposits of extra-heavy crude oil.
After the signing, Rodríguez said, according to VTV, that the state offers a legal framework to protect ExxonMobil’s operations.
US Companies Returning to Venezuela
If ExxonMobil reaches a permanent agreement, it would mark a major return to Venezuela.
In 2007, President Hugo Chavez pushed ExxonMobil and ConocoPhillips out of Venezuela in a nationalization drive after they refused to give PDVSA majority control of their Orinoco extra-heavy oil projects.
The MOU came two months after Trump said that ExxonMobil was among a group of companies planning to do business in Venezuela again.
“We have Exxon going in, we have Chevron going in, we have our big oil companies going in, and everybody’s bidding,” Trump said at a press event in the Oval Office on Aug. 31.
Chevron announced on Sept. 2 that its Venezuelan joint ventures plan to invest more than $7 billion over the next five years, as part of an expansion expected to more than double the company’s production in the country.
Reuters, Owen Evans, and Tom Ozimek contributed to this report.
