U.S. Operation in Venezuela
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President Trump met with oil and gas executives on Friday in an effort to push them to invest money in Venezuela, a plan many of them are reluctant to embrace.
Rebecca F. Elliott
President Trump has put a number on how much he wants the biggest U.S. and European oil giants to pour into Venezuela: at least $100 billion.
During a meeting at the White House on Friday afternoon, oil executives made it clear that they were not yet prepared to follow through.
Darren Woods, who leads the largest U.S. oil company, Exxon Mobil, was especially blunt during a televised portion of the meeting.
“We’ve had our assets seized there twice, and so you can imagine to re-enter a third time would require some pretty significant changes,” he said. “Today it’s uninvestable.”
For the company to return to Venezuela, legal changes would have to be made, and there would need to be “durable investment protections,” Mr. Woods, Exxon’s chief executive, said. But he offered an olive branch to the White House, saying Exxon was prepared to send an exploratory team to Venezuela within the next few weeks if it received security guarantees.
Exxon and ConocoPhillips, another large American oil company, have been pursuing substantial claims against Venezuela’s government for assets it seized during a nationalization wave two decades ago.
Recouping that money seemed on Friday to be of little interest to Mr. Trump, who said, “We’re not going to look at what people lost in the past, because that was their fault.” He suggested the $12 billion in claims that ConocoPhillips has been pursuing might make a good write-off, a term for when companies recognize losses in a way that lowers their taxable income.
“It’s already been written off,” Ryan Lance, the company’s chief executive, said in response to Mr. Trump.
Accounting rules require companies to generally write off investments that they are unlikely to make back, but that doesn’t mean businesses have given up trying to recover that money. Many companies and investors spend years in court and arbitration cases in pursuit of money they are owed.
Some smaller businesses have been clamoring to establish or expand oil production in Venezuela, and energy trading or refining businesses would be happy to have more of Venezuela’s oil flow to the United States.
But even Harold Hamm, an Oklahoma oil tycoon and one of Mr. Trump’s closest oil-industry allies, stopped short of committing to work in the country.
“It excites me as an explorationist. Everybody has that in their blood,” Mr. Hamm said at the White House. But, he added, Venezuela has “got its challenges.”
The question of how much money oil companies may spend in Venezuela will come down to how those investments are defined. Simply maintaining Venezuela’s oil output at current levels, around one million barrels per day, would cost more than $50 billion over the next 15 years, according to estimates from the consulting firm Rystad Energy.
But nobody is talking about very large sums yet. After Mr. Trump promised the $100 billion in investments by Big Oil, two people close to the companies attending Friday’s meeting cautioned that they were not aware of any such commitment by the businesses.
Executives and analysts widely agree that there is room to boost Venezuela’s production by several hundred thousand barrels per day within the next two years, at modest cost. But raising output above 1.4 million barrels per day most likely would require an additional $120 billion or more between now and 2040, Rystad estimated.
To put those numbers in context, the largest U.S. oil company, Exxon, has said it expects to spend around $28 billion this year on big projects around the world.
Chevron, whose vice chairman, Mark Nelson, attended Friday’s meeting, is in a unique position for having stayed in Venezuela long after many other U.S. oil companies left. It is now Venezuela’s largest private oil producer.
After Mr. Nelson spoke, Mr. Trump made what came off as a not-so-veiled threat. “If we make a deal, you will be there a long time. If we don’t make a deal, you won’t be there at all,” he said without naming Chevron or any other oil company.
When pressed, Mr. Nelson later said Chevron expected to be able to increase its oil production in Venezuela by about 50 percent over the next two years.
The energy secretary, Chris Wright, suggested earlier Friday on Fox News that the U.S. Export-Import Bank might provide “credit support” for companies making large investments in Venezuela. The independent federal agency offers financing when private capital is not available.
Mr. Trump said the U.S. government was prepared to provide security guarantees, but not money for oil projects.
“Our giant oil companies will be spending at least $100 billion of their money, not the government’s money. They don’t need government money,” he said. “But they need government protection.”
Rebecca F. Elliott covers energy for The Times.
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