Exxon Signs Venezuela Oil Deal in First Step Back After 19 Years
ExxonMobil has signed a non-binding agreement with Venezuela’s state oil company PDVSA to assess upstream oil opportunities, taking its first step towards a return to the country nearly two decades after its assets were seized.
The company announced the memorandum of understanding on Monday, 9 November. It named no projects or areas under evaluation, and stressed that no investment has been committed.
“This memorandum is a meaningful first step, but any future investment would require stable policies, clear regulations, strong investment protections and competitive returns,” ExxonMobil said in a statement.
A final joint venture or production-sharing contract would be needed before ExxonMobil could take part in exploration or production in Venezuela, according to Reuters.
A first step, not a return yet
The distinction matters. A memorandum of understanding is a preliminary agreement, not a deal to drill. ExxonMobil will now study possible opportunities with PDVSA, but it has not agreed to spend money, hire staff or restart operations in the country.
That caution reflects the company’s history in Venezuela: its assets there have been nationalised twice in 50 years, and chief executive Darren Woods called the country “uninvestable” earlier this year.
Woods has since said progress is being made on fiscal rules, legal frameworks and investor protections, Seeking Alpha reported — enough, it seems, to begin formal talks.
The signing ceremony was broadcast on Venezuelan state television, where interim President Delcy Rodríguez welcomed ExxonMobil back and expressed hope that the memorandum would soon lead to more.
Nineteen years after the expropriation
ExxonMobil left Venezuela in 2007, when Hugo Chávez’s government expropriated its Cerro Negro and La Ceiba assets. Before the seizure, ExxonMobil held a 41.67 per cent stake in the Cerro Negro heavy crude project, now known as Petromonagas, and a 50 per cent interest in La Ceiba in the southern Maracaibo basin.
The company took the dispute to the World Bank’s International Centre for Settlement of Investment Disputes in 2007. An ICSID tribunal awarded ExxonMobil $1.6 billion plus interest in 2014 over the earlier dispute.
Venezuela sits on the world’s largest proven oil reserves, roughly 300 billion barrels, most of it in the Orinoco Belt. But production has collapsed after two decades of underinvestment and sanctions, and rebuilding the industry will take tens of billions of dollars.
For American consumers, the stakes are familiar. When oil prices plunged in early November on hopes of an end to the war with Iran, petrol and diesel costs eased — a reminder of how quickly global supply shifts reach the pump. US fuel prices had hit record election-eve highs only days earlier, with regular petrol near $4.20 a gallon.
Washington’s wider Venezuela opening
The ExxonMobil agreement is the latest step in the Trump administration’s effort to revive Venezuela’s oil sector after US forces removed Nicolás Maduro from power in January.
Chevron moved first. In September it agreed to invest $7 billion in Venezuela over five years through its joint ventures, aiming for production of 600,000 barrels per day.
ExxonMobil’s move is smaller and more conditional, but it carries weight. The company is the world’s largest publicly traded oil producer, and its return — even a tentative one — would signal to other Western oil majors that Venezuela is open for business again.
US stock futures have steadied in recent days as investors weigh the midterm results and falling oil prices.
What happens next
Several questions remain unanswered. ExxonMobil has not said which fields it is studying, when a final contract might be signed, or how much it would invest if talks succeed — or whether Caracas can offer the legal guarantees it is demanding.
The interim government needs foreign capital and expertise: output is a fraction of its late-1990s level, refineries and pipelines are in poor repair, and without outside investment production is unlikely to recover soon.
For now, the memorandum is best read as an option, not a commitment. ExxonMobil has secured a seat at the table. Whether it stays — and spends — will depend on the terms Caracas is prepared to offer.
Frequently Asked Questions
Is ExxonMobil returning to Venezuela?
Not yet. The company has signed a non-binding memorandum of understanding to assess opportunities. A final joint venture or production-sharing contract would be required before it could explore for or produce oil.
When did ExxonMobil leave Venezuela?
Its assets were expropriated in 2007 under Hugo Chávez. An international tribunal awarded the company $1.6 billion plus interest in 2014.
What did CEO Darren Woods say about Venezuela?
Earlier this year he called the country “uninvestable” given conditions at the time. The company says progress is now being made on fiscal, legal and investor-protection rules.
How does this compare with Chevron’s deal?
Chevron agreed in September to invest $7 billion over five years, targeting 600,000 barrels a day. ExxonMobil’s agreement commits no money and names no projects.
