ExxonMobil CEO calls Venezuela ‘uninvestable’ without ‘significant changes’

As President Donald Trump pushed U.S. oil companies to commit to invest $100 billion in Venezuela at a White House meeting on Friday, the CEO of ExxonMobil warned the company is far from enlisting.

CEO Darren Woods said that Venezuela is “uninvestable” after Trump asked him how long it would take the firm to restart operations there. He added that “significant changes have to be made to those commercial frameworks, the legal system, there has to be durable investment protections,” and there needs to be a rewrite of the laws governing oil production in Venezuela.

He would only commit to sending a technical team to the country shortly to begin assessing the situation. The exchange underscored how the industry is struggling to chart a course that will please the president without spending recklessly on risky drilling ventures.

The afternoon meeting was attended by several major oil companies in addition to Exxon, including Chevron, ConocoPhilips and Shell. Chevron is the only U.S. firm operational in Venezuela. Trump vowed the companies that commit to pumping in Venezuela will make substantial profits, but the firms, aware of the extremely challenging economics and security concerns around drilling in the unstable Latin American nation, are reticent to commit.

“American companies will have the opportunity to rebuild Venezuela’s rotting energy infrastructure and eventually increase oil production to levels never seen before,” Trump said at the start of the meeting. “Our giant oil companies will be spending at least $100 billion of their money.”

“We are going to be making the decision as to which oil companies can go in, which we will allow to go in,” he said.

Woods noted that Exxon has twice had its infrastructure expropriated by the Venezuelan government in the past. The company is still owed about $1 billion. Another firm at the meeting, ConocoPhilips, is still owed almost $9 billion in Venezuela, as a result of its assets being expropriated there. But Trump told the firms that are owed money that they will not get any special consideration in deal making.

“We’re going to start with an even plate,” he said. “We’re not going to look at what people lost in the past because that was their fault. That was a different president. You’re going to make a lot of money, but we’re not going to go back.”

Trump vowed that security on the ground would not be an issue for companies, even as Venezuela continues to be one of the most dangerous places for any business to operate and oil firms have repeatedly expressed concern about the safety of their workers. Trump did not explain how the U.S. would provide such security guarantees.

While the largest oil U.S. companies hedged, some of the executives in the room said they would heed Trump’s call. Among the most enthusiastic was Jeff Hildebrand of Hilcorp, a large, privately owned oil and gas producer.

“Thank you for your great, tremendous leadership in protecting the interests in the Western Hemisphere,” he said. “The message that you have sent to China and our enemies to stay out of our backyard is absolutely fantastic … Hilcorp is fully committed and ready to go to rebuilding the infrastructure in Venezuela.”

Wael Sawan, the CEO of Shell, a British company, told Trump that the firm is pumping 45,000 barrels a day in Venezuela and is prepared to scale that up in the coming years, “investing hard in the country following your recommendation,” if the proper commercial and legal “framework” is established.

After a lengthy back-and-forth with the news media Friday during the event with energy executives, Trump told reporters to leave the room “and we will see what kind of a deal we’re going to make with these geniuses.”

Expanded drilling by U.S. firms in Venezuela is a key pillar of Trump’s plan for overhauling the economy and government of Venezuela, a nation that once produced almost four times the amount of oil it does today and badly needs revenue from its vast reserves for its recovery. But after its infrastructure has fallen into disrepair in recent years and U.S. firms that operated there saw their assets expropriated by the socialist regime, there is limited corporate appetite for investing the tens of billions of dollars it would require over as long as a decade to return that country to production levels of the past.

The picture is further complicated by the White House quest for low prices, with oil trading for less than $60 a barrel and the administration aiming to drive it down significantly more. Trump posted on social media ahead of the meeting that “a very big factor” in U.S. involvement in Venezuela is “the reduction of Oil Prices for the American People.”

During the roundtable with oil CEOs, Trump said drilling in Venezuela would create “massive wealth. And more importantly than massive wealth, it leads to lower taxes and a lot of jobs for Americans and for Venezuelans.”

Lower oil prices, however, make it financially unsound for companies to invest in new drilling in Venezuela, where the research firm Wood MacKenzie suggests firms would need to make as much as $80 per barrel to break even.

“The math doesn’t work,” said Ed Hirs, an energy economist at the University of Houston. “No oil company is going to invest money in a losing venture.”

The economic realities have moved Trump to suggest that perhaps the United States will find some way to subsidize U.S. firms that invest in Venezuela. It is a fraught prospect. Members of Congress are already warning the oil executives against entering into any deal that involves U.S. tax dollars, with several Democratic senators sending a letter to oil executives Friday warning them that any subsidies the administration offers them could be rescinded by lawmakers.

U.S. competitors to the major oil companies that could have the capability of drilling in Venezuela are meanwhile strongly urging the White House against offering any incentives. They are dismayed by the administration’s strategy on Venezuela, which they warn threatens to undermine the domestic oil industry. Rig counts in the United States have already been dropping amid the strain of low prices, with producers laying off large numbers of U.S. oil field workers.

“A lot of the domestic oil and gas companies are getting killed by this, because the administration is saying, ‘We will prop up a foreign country to produce more oil for the world market,’” said D. Kirk Edwards, an oil and gas executive and former chair of the Permian Basin Petroleum Association. “It is a shot in the face of the domestic industry to try to prop up a foreign competitor like this.”

“It would be like going to Brazil, taking them over for their cattle, and then flooding the American beef market with it,” he said. “That’s the analogy we see in the oil and gas business.”

For the White House, it all underscores the tension of its competing goals: lower prices at the pump as much as possible while also pushing oil companies to drill more at home and abroad. The problem is that driving prices down by flooding the market with more oil takes away the financial viability of expanded drilling.

“The administration is talking out of both sides of its mouth in saying they want prices down to $50 a barrel and expanded production,” said Morgan Downey, a commodities trader and the author of the book “Oil 101.” “You can’t have both. It does not make sense. It is pure politics.”

He said industry executives eager to stay on the good side of the White House have to publicly “smile and tell the president, ‘yes, you are making great decisions.’ But the numbers don’t add up.” He is skeptical there will be much of any new production in Venezuela by U.S. firms absent drastic shifts in market prices.

The administration’s actions so far have focused on the oil Venezuela has already pumped and could produce itself in the foreseeable future. Trump announced early this week that 30 million to 50 million barrels of sanctioned Venezuelan oil will be routed to the U.S., where it will be refined and sold into the market. It is relatively small amount of crude, the equivalent of what is produced by U.S. drillers over the course of a few days. Administration officials said any oil Venezuela pumps going forward will also be sent to U.S. refineries.

The arrangement irks companies drilling wells in places like West Texas and North Dakota. Edwards said that instead of refining the Venezuelan oil and selling into the market, the administration should just ship it directly to the Strategic Petroleum Reserve, which was drawn down by the Biden administration to stabilize soaring gas prices following Russia’s invasion of Ukraine in early 2022.

“That would actually help solve an energy security problem for the country,” he said.

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• Theodoric Meyer contributed.