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US oil companies want “serious guarantees” from Washington before they make splashy investments in Venezuela as President Donald Trump urges them to back his bid to reshape energy markets.
American officials held crunch talks with top energy executives in Miami on Wednesday, just as Trump made a show of raw power over global crude markets, seizing control of Venezuela’s oil sector and ordering US special forces to capture a Russian tanker in the north Atlantic.
Trump has also summoned executives from some of the country’s biggest energy groups to a meeting at the White House on Friday.
The executives are expected to press the president on providing strong legal and financial guarantees before they agree to commit capital to Venezuela, according to people familiar with their plans.
Earlier this week Trump said the American oil companies could be “reimbursed by us, or through revenue” if they invested in Venezuela. But executives remained cautious, with some citing the erratic policymaking.
“No one wants to go in there when a random fucking tweet can change the entire foreign policy of the country,” said one private equity investor who specialises in energy.
The discussions in Miami on Wednesday came just hours after Trump said Venezuela would surrender millions of barrels of oil to US-chartered vessels that would sail the crude to the US, where Gulf refiners are gearing up to process it.
The White House said Washington would control Venezuela’s oil “indefinitely”, seizing the lifeblood of one of the Opec cartel’s founding members.
After bombing Iran and Nigeria, “Venezuela is the third OPEC oil producer to be attacked by the US in the last year,” said Bill Farren-Price at the Oxford Institute for Energy Studies.
“This is a global agenda that will increasingly refashion global energy trade to US terms and conditions,” he said.
But Trump’s plan to revive Venezuela’s oil sector has already met with scepticism among US executives, who say political and legal risks, coupled with low oil prices, are obstacles.
US energy secretary Chris Wright met senior officials from Chevron and ConocoPhillips, delivering Trump’s message that America’s biggest oil groups must pour billions of dollars into Venezuela’s battered energy industry.
The US also signalled on Wednesday that it would open the door to American oilfield services companies to work in Venezuela and begin rolling back some of the sanctions that have hobbled its economy.
But Wright acknowledged in remarks at the Goldman Sachs conference in Miami that US oil giants were not going to “put billions of dollars building new infrastructure in Venezuela next week”.
Major players in the energy sector and investors said the US would need to backstop big projects.
“There would have to be some serious guarantees from the government to get the big boys back in Venezuela,” said a senior executive at a large US energy company. “It’s going to take a while to see real investment in the country and then longer to get production up.”
Chevron finance chief Eimear Bonner sounded a cautious note in closed-door remarks to investors on Tuesday and gave no indication of plans for near-term expansion in the country, according to people present.
Chevron is the only American company that holds a US licence to export Venezuelan crude, and is seeking to amend its agreement with the US Treasury department to sell more of the country’s oil.
Executives from the biggest US oil groups, including Chevron, ExxonMobil and ConocoPhillips, are among those expected to meet Trump at the White House on Friday.
Amos Hochstein, managing partner at investment group TWG Global and a former adviser to former president Joe Biden, said investing in Venezuela was fraught with legal, financial and political risk. American oil companies needed to know whether they would be shielded beyond Trump’s term in office, he said.
“US companies need to know who their counterparties are. Are they signing deals with the Venezuelan government? Is the Venezuelan government legitimate?”
Hochstein added: “For the next three years these companies will have to put money in and no revenue will come out until much later. And at that point Donald Trump will no longer be the president.”
Neil McMahon, co-founder of energy investment group Kimmeridge, said US companies would need formal financial guarantees from the administration before committing money.
“Companies are all concerned about what legal framework these new contracts would take just given the fact they have been burnt so many times before.”
One leading private equity investor said his firm was “ready to get down and start looking at stuff” but cautioned Venezuela was “as risky as it gets”.
“This government’s basically going to have to guarantee it,” he added.
“Short of something like that, no investor, no public company that has shareholders can put their capital to work in a country that doesn’t have real laws and takes profits and confiscates assets.”