Trump urges US oil giants to repair Venezuela’s ‘rotting’ energy industry

By Jarrett Renshaw and Bo Erickson

WASHINGTON, Jan 9 (Reuters) – U.S. President Donald Trump met with executives from some of the world’s largest oil companies at the White House on Friday to discuss Venezuela, saying he wants them to invest $100 billion in the country to vastly expand its production.

Trump has named oil as the priority for his strategy for the South American nation after U.S. forces seized its leader Nicolas Maduro in an overnight raid on its capital January 3.

“American companies will have the opportunity to rebuild Venezuela’s rotting energy infrastructure and eventually increase oil production to levels never, ever seen before,” Trump said at the opening of the meeting.

He was flanked by top executives from Exxon Mobil, ConocoPhillips, Chevron Corp and others.

“We’re going to be making the decision as to which oil companies are going to go in,” the Republican president said.

He praised an agreement with Venezuela’s interim leaders to provide 50 million barrels of crude oil to the U.S., where numerous refineries are specially equipped to refine it. Trump said he expects such deliveries to continue indefinitely.

“One of the things the United States gets out of this will be even lower energy prices,” he said.

U.S. forces have continued to apprehend Venezuelan oil tankers at sea to enforce an embargo. The fifth such seizure was announced on Friday.

Trump administration officials have said they need to control Venezuela’s oil sales and revenues indefinitely to ensure the country acts in America’s interests, including by reducing corruption and drug trafficking.

Some Democratic lawmakers have criticized this approach as extortion. Industry analysts have also warned about political instability as the country treads a fine line between denouncing Maduro’s capture and appeasing the U.S.

“UNINVESTABLE”

Companies including Chevron, Vitol and Trafigura are competing for U.S. licenses to market Venezuela’s existing crude oil, but oil majors are hesitant to commit to big, longer-term investments in Venezuela due to high costs and political instability.

Exxon CEO Darren Woods said at the White House meeting that the company sees Venezuela as currently “uninvestable” and needs to see significant changes to return there.

“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.

“We’re confident that with this administration and President Trump, working hand in hand with the Venezuelan government, that those changes can be put in place,” he said. 

Exxon and ConocoPhillips departed Venezuela nearly 20 years ago after their assets were nationalized.

Chevron Vice Chairman Mark Nelson said the company is committed to investments in Venezuela. Chevron is the only U.S. oil major still operating in the country.

Several smaller independents and private equity-backed players were also invited to the meeting, including some with links to Colorado, home state of Energy Secretary Chris Wright. Many of those executives praised Trump for his policies on Venezuela, and said they were prepared to invest in the country and market its oil.

Decades of underinvestment have eroded production in Venezuela, an OPEC member that boasts the world’s largest oil reserves but accounts for only about 1% of global supply.

Venezuela pumped as much as 3.5 million barrels per day in the 1970s, more than triple current levels.

Trump said at the meeting that the U.S. would guarantee the physical and financial security of oil companies investing in Venezuela, but did not provide details.

On Friday morning, Energy Secretary Chris Wright said in an interview on Fox News ahead of the White House talks that there is “a real possibility” the U.S. could use its Export-Import Bank to help fund large oil projects in Venezuela. This could reduce financial risks for companies that decide to invest there.

Trump added the ongoing discussions with oil companies are aimed at securing commitments.

“We have to get them to invest and then we have to get their money back as quickly as we can,” Trump said. “And then we can divvy it all up between Venezuela, the United States, and them. I think it’s simple. I think the formula is simple.”

(Reporting by Sheila Dang, Nathan Crooks, David French, Jarrett Renshaw, and Shariq Khan; Writing by Richard Valdmanis; Editing by Nathan Crooks, Nia Williams and David Gregorio)