U.S. officials have told major American oil companies that returning to Venezuela and investing heavily in its oil sector would be a prerequisite for recovering compensation tied to assets nationalized nearly two decades ago, Reuters reported Sunday, citing people familiar with the discussions.
White House and State Department officials have raised the issue in recent weeks as part of contingency planning for a post-Nicolás Maduro government. The message was that companies seeking repayment would need to finance the rehabilitation of Venezuela’s oil industry upfront.
Venezuela seized the assets of several international oil firms in the 2000s after then-president Hugo Chávez demanded greater state control through oil company PDVSA. Chevron remained in the country via joint ventures, while Exxon Mobil (XOM) and ConocoPhillips (COP) exited and pursued arbitration claims.
U.S. President Donald Trump said over the weekend that American oil companies were prepared to return and invest, following the U.S. operation that removed Maduro from power. Officials have indicated, however, that companies would need to shoulder the cost of rebuilding production before any compensation claims are addressed.
That condition could prove expensive. ConocoPhillips (COP) has sought roughly $12 billion linked to nationalizations under Chávez, while Exxon Mobil (XOM) has pursued claims of about $1.65 billion. Both companies have previously warned of the risks tied to renewed investment in Venezuela.
Even if companies do return, analysts say it would likely take years to materially lift output. Venezuela holds some of the world’s largest crude reserves, but production has collapsed due to underinvestment, mismanagement and sanctions. Output averaged about 1.1 million barrels a day last year, down sharply from peaks above 3 million barrels a day decades earlier.