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Investors doubt Venezuela’s political stability and investment costs Chevron and ConocoPhillips are wary of rushing to invest in Venezuela, sources say U.S. plans three-step process to rebuild Venezuela, Rubio says
(Reuters) – U.S. oil executives summoned to the White House on Friday to discuss potential investment plans in Venezuela will carefully weigh the country’s business potential against President Donald Trump’s enthusiasm, amid more cautious sentiment expressed by some investors.
Energy Secretary Chris Wright, speaking at the Goldman Sachs Energy Conference in Miami this week, reiterated President Trump’s claim that U.S. oil companies are prepared to spend billions of dollars to rebuild the South American country’s oil economy after the U.S. military ousted President Nicolas Maduro from power on Saturday.
But some energy investors were skeptical, questioning how much such spending would cost in Venezuela, which has the world’s estimated largest oil reserves. They were also concerned about the country’s political stability and whether they could trust the interim government of Caracas, run by Delcy Rodriguez.
“Investors will want long-term stability and good financial conditions to protect against the risk of asset nationalization, as we’ve seen in the past in Venezuela,” said David Burns, portfolio manager and senior investment analyst at American Century Investments, a major shareholder in Chevron and Exxon Mobil.
Multiple attendees at a closed-door meeting held by Chevron and ConocoPhillips in Miami told Reuters that executives from both companies offered little insight on Venezuela, but made one thing clear: They had no intention of making any hasty decisions.
Chevron and Conoco did not respond to requests for comment.
On Friday, Trump is expected to urge oil company executives to invest and help boost Venezuelan oil production at a meeting attended by Wright, Secretary of State Marco Rubio, Interior Secretary Doug Burgum and 17 major companies. Representatives include ConocoPhillips, Exxon and Chevron, as well as Spain’s Repsol, trading company Vitol and Trafigura, according to sources familiar with the deal.
“Thanks to President Trump, the American people, energy companies, and the Venezuelan people will all stand to benefit greatly from new and unprecedented investment in Venezuela’s oil infrastructure,” White House Press Secretary Taylor Rogers said in a statement.
Chevron already has operations in the country, but Exxon and Conoco left about 20 years ago after their assets were nationalized and remain billions of dollars in debt.
“There is a tension between attractive geological resources and clear business opportunities, and significant ground risks, uncertainty and unpaid claims,” said Jeffrey Pyatt, a former assistant secretary of state for energy resources in the Biden administration.
Two sources told Reuters on Thursday that foreign embassies in Venezuela have begun coordinating a visit next week that will include representatives from U.S. and European oil companies.
Matthew Salley, investment director at Tortoise Capital, a fund manager that owns Chevron shares, said Chevron could support further investment in Venezuela if it could show it could make a profit, but he would be very cautious because the country’s infrastructure is very old.
“If Chevron said they were going to give billions of dollars a year to Venezuela, we would probably sell,” he said.
Services companies, which could be among the first to benefit from a rush to expand into Venezuela as infrastructure is rebuilt, are trying to temper their enthusiasm for now.
“We have yards across the border in Colombia that deliver rigs to this region, and we understand what it takes to get the work done there, but the timing has to be right and we have to have the right customer and partner relationships,” Helmerich & Payne President Trey Adams said at the Miami conference.
Questions about political instability remain
Ali Moshiri, former president of Africa and Latin America for Chevron Corp. and current CEO of Amos Global Energy, said his company plans to enter Venezuela and is in early discussions with U.S. government departments for public funding and service companies for infrastructure repairs and pipeline construction. But he added that despite overwhelming interest from investors, the plan hinges on the U.S. deciding who will manage the domestic transition period.
“That decision has to be taken. That is a prerequisite for investors,” Moshiri said.
Although President Trump has said the United States intends to take control of Venezuela, it remains unclear how that will play out on the ground, especially given questions about how the different factions in Caracas will work together in Maduro’s absence.
Rubio said Wednesday that the United States has a three-step plan for Venezuela, starting with stabilization, a recovery phase that guarantees access to the country for U.S. oil companies, and finally a transition.
Samantha Karl Yoder, co-chair of the international practice at lobbying firm Brownstein Hyatt Farber Schreck, said some U.S. oil companies may be concerned about being forced to enter Venezuela early or potentially facing repercussions in the future.
“Companies may feel they have to re-enter to get what they want in other areas. Will the government hold permits and licenses hostage? Will the government provide financial incentives for companies to enter? These are the questions I would have if I were an integrated oil company,” she said.
Sheila Dunn, Nathan Crooks and David French report in Miami, Jarrett Renshaw in Washington and Shariq Khan in New York. Additional reporting by Stephanie Kelly and Pietro Lombardi. Editing: Nathan Crooks and Nia Williams
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