Exxon Mobil, the biggest U.S. oil company, said on Monday that it reached a preliminary deal with Venezuela that brings it a step closer to returning to the South American country. The agreement gives Exxon time to evaluate oil production opportunities, and is not binding — stipulations similar to those in other agreements struck by U.S. oil companies this year as they consider investing in Venezuela. Nevertheless, it is a symbolic win for President Trump, who has been pressing U.S. oil companies to invest in Venezuela.
It also represents a normalization of relations between Exxon and Caracas, which deteriorated after the country’s socialist government in 2007 changed the terms under which foreign oil companies operated there. Exxon left rather than accept the new rules, and has long sought compensation for the assets it relinquished. Exxon, in a statement about the deal, said that “any future investment would require stable policies, clear regulations, strong investment protections and competitive returns.” Such arrangements, known as memorandums of understanding, are common in the oil industry, where companies often negotiate exclusive rights to perform tests or complete detailed reviews before committing to projects that might cost billions of dollars and last for many years.
Nevertheless, it marks a remarkable turnaround from January, when Darren Woods, Exxon’s chief executive, called Venezuela “uninvestable.” “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,” Mr. Woods said at a televised White House meeting that Mr. Trump hosted days after U.S. forces captured Venezuela’s leader, Nicolás Maduro.
The oil market looks much different than it did then. For one, oil prices have climbed around 50 percent since January, largely because of the war with Iran. That conflict has also highlighted the value of producing oil in countries like Venezuela that are far from maritime choke points like the Strait of Hormuz.
Maduro’s seizure, Venezuela overhauled legislation to make the country more attractive to foreign oil companies. Woods said about Venezuela on the company’s third-quarter earnings call last month. But like I said earlier, it’s going to require some substantial changes to the way things have historically been done in Venezuela.” For all of the progress that Venezuela has made, “there is a way to go,” Mr.
Exxon has a unique interest in smoothing its relationship with Delcy Rodríguez, Mr. Maduro’s successor, because of the company’s position in neighboring Guyana. Oil production off the shores of the former British colony is a major growth engine for Exxon, but the company’s future there has been clouded by a territorial dispute with Venezuela.
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