Opportunistic grab: Oil tankers sail the Maracaibo Lake in Venezuela. Although Trump had previously dangled the prospect of US subsidies for overseas oil work, Burgum last Friday reiterated that Washington is unlikely to provide financial support. — AFP
WASHINGTON: President Donald Trump has predicted a quick agreement by major oil companies to spend at least US$100bil in Venezuela, his most direct effort yet to pressure them back into the country following the US’s brazen capture of leader Nicolás Maduro.
“We’re going to be making the decision as to which oil companies are going to go in – that we’re going to allow to go in – and cut a deal with the companies. We’ll probably do that today or very shortly thereafter,” Trump said last Friday during a White House meeting with nearly 20 industry executives.
Trump said he foresaw the companies making the expenditures without federal assistance, saying oil companies will be “spending at least US$100bil of their money, not the government’s money”.
“If you don’t want to go in, just let me know, because I got 25 people that aren’t here today that are willing to take your place,” Trump told the oil representatives.
The gathering comes less than a week after the US military raid on Caracas. The intervention stunned many Americans, including some of Trump’s own supporters, who called it a naked attempt to seize another country’s natural resources.
The president has framed it as a chance to oust a leader in Maduro who posed a national security threat and tap Venezuela’s massive oil reserves as a source of hemispheric power and revenue.
To do that, Trump is looking to Western oil companies, including firms that joined him in the White House’s East Room, to revitalise Venezuela’s dilapidated oil infrastructure.
He sought to reassure executives they would have the guarantees they need to do that work.
“We’re dealing with the country, so we’re empowered to make that deal. And you have total safety, total security,” Trump said. “You’re dealing with us directly, you’re not dealing with Venezuela or we don’t want you to deal with Venezuela.”
US oil major executives in attendance included Mark Nelson of Chevron Corp, Darren Woods of Exxon Mobil Corp and ConocoPhillips’ Ryan Lance, all of whom represent companies with experience operating in Venezuela.
The heads of smaller independent producers were there as well, such as Continental Resources Inc’s Harold Hamm and Hilcorp Energy Co founder Jeff Hildebrand – both Trump donors.
Trump’s exhortations of the oil industry dovetail with a broader push to address cost-of-living concerns weighing heavily on Republicans’ bid to maintain control of Congress in November’s midterm elections.
The president frequently touts sinking prices for oil and petrol, which last Friday averaged US$2.81 per unleaded gallon, according to the American Automobile Association, as salve for US consumers.
That’s a double-edged sword. Low prices are viewed warily within the oil industry, which Trump is counting on to keep pumping crude.
Some US oil operators, particularly independent producers, are concerned about current prices that have strained the economics of some domestic drilling.
And they’re worried about the prospect of an influx of Venezuelan crude suppressing prices further, making more wells too expensive to produce.
Markets have already reacted to the administration’s plans to start selling upwards of 50 million barrels of Venezuelan crude, including supplies that built up in storage amid the US naval blockade.
Futures for West Texas Intermediate, the US benchmark, were hovering around US$59 last Friday.
The meeting creates an awkward dynamic for oil companies that belies Trump’s predictions of bountiful Venezuelan production under US control.
Some industry representatives have expressed worry that attending the gathering risks casting them as willing participants in a callously opportunistic grab for Venezuela’s crude, said people familiar with the matter.
That’s especially because broad reluctance remains about investing in the country immediately. At the same time, executives need to tread a fine line with the president, who is pressing them to swiftly pledge new investments.
Adding to the tension is the strong political support Trump has enjoyed from the oil industry, including representatives in the room last Friday.
During an energy roundtable during the 2024 campaign, Trump promised oil executives a suite of policy changes – including undoing some environmental regulations – as he asked the group to raise US$1bil for his political operation, according to people familiar with the exchange.
Last week, executives had stressed to administration officials that any Venezuelan oil rebuild requires guarantees of physical security and contract certainty, given concerns about Venezuela’s stability under acting leader Delcy Rodriguez.
While Chevron still operates in Venezuela under a special US licence, Exxon Mobil and ConocoPhillips left after Maduro’s predecessor, Hugo Chavez, nationalised their assets.
Venezuela sits atop the world’s largest proved crude reserves, but its output has dwindled to less than one million barrels per day amid decades of disrepair and the exodus of foreign firms.
Cleaning up environmental damage and rebuilding the country’s abandoned rigs, leaky pipelines and fire-ravaged equipment could take years – and tens of billions of dollars – simply to modestly boost production, much less approach the country’s 1970s peak of almost four million barrels per day.
And though the president had previously dangled the prospect of US subsidies for overseas oil work, Interior Secretary Doug Burgum last Friday reiterated that Washington is unlikely to provide financial support.
“The capital is going to come from the capital markets and come from the energy companies,” Burgum told Bloomberg Television.
“I don’t see that these companies are going to need support from the United States, other than things around security. If we can provide a secure, stable environment, the resource here is so significant and so large that it’s going to be attractive for people to go in and develop.” — Bloomberg
