Big Oil eyes Venezuela

Washington just put Venezuelan crude back on the table, and Big Oil is deciding whether or not to take a seat.

Yesterday, the Trump administration issued a broad general license allowing US oil companies to expand their operations in Venezuela, easing restrictions across everything from production and transport to processing, as Washington looks to revive the country’s energy sector following the US capture of former president Nicolás Maduro.

The timing of this policy shift matters for two major US oil producers reporting earnings this week: Chevron and Exxon Mobil.

Chevron

Chevron beat both top- and bottom-line expectations, though profits still fell 14% year over year as lower oil prices weighed on results. Production was the bright spot, with output up 21% from a year ago.

Domestically, Chevron produces about 1 million barrels per day in the Permian Basin, but growth there is slowing. That’s pushing investor attention toward international opportunities in Kazakhstan, Guyana, and now, Venezuela.

Chevron is the only US major currently operating in Venezuela under an existing license, with roots there stretching back decades, giving it a unique foothold if production ramps up under the new general license.

Venezuela still accounts for only 10% of Chevron’s output, but the company has suggested it could raise Venezuelan production by up to 50% over the next 18 to 24 months if conditions allow.

Exxon Mobil

Exxon also beat Wall Street’s targets for the quarter, powered by strong performance in the Permian Basin and Guyana, and reported its highest annual production in over 40 years.

But unlike Chevron, Exxon has no active operations in Venezuela, and little appetite to change that. CEO Darren Woods has described the Venezuelan oil landscape as “uninvestable” without significant changes, citing past asset seizures.

Beyond the operational hurdles, oil companies like Exxon face legal uncertainty. Lawmakers have warned that deals struck now could be challenged by Congress, overturned by future US administrations, or disputed by a future Venezuelan government.

For now, Venezuela is less a windfall than a wild card, and Big Oil has to decide whether the payoff is worth sitting at a very unstable table.—SY