A Wall Street Journal report on September 16 revealed that ExxonMobil Holdings Corporation (NYSE:XOM) is nearing a preliminary agreement with Venezuela's state-owned PDVSA, potentially marking its return to the country almost two decades after its assets were nationalized. According to , Exxon has shown interest in the large Petromonagas heavy oil project in the Orinoco Belt, as well as in areas in the neighboring Carabobo block. While the talks are still in their preliminary phase and could still fall apart or be delayed, they mark a major turnaround from Exxon's previous stance on Venezuela.
The company's CEO, Darren Woods, stated in January that the country was "uninvestable" without durable investment protections, legal reforms, and changes to its hydrocarbon laws. The development comes amid a broader push by the Trump administration to open Venezuela's oil industry to American companies and revive the country's dilapidated oil infrastructure. The South American nation is sitting on the largest proven crude oil reserves in the world, accounting for roughly 17% of the global total.
Venezuela could provide Exxon with access to an enormous resource base at a time when the company is actively seeking low-cost and long-duration assets. The fields under consideration are estimated to contain more than 50 billion barrels of oil buried underground. Exxon already holds an advantage through its previous experience in the country.
Petromonagas, formerly called Cerro Negro, was once the energy firm's flagship project in Venezuela, giving it familiarity with the country's vast heavy and extra-heavy crude resources. Petromonagas also remains one of the few Venezuelan projects with an operational upgrader capable of turning the Orinoco's extra-heavy crude into lighter exportable grades. Additionally, Darren Woods has pointed to Exxon's experience with extracting heavy oil at its Canada projects as another key advantage.
This expertise could position the company to develop Venezuela's heavy crude resources while keeping costs relatively low. The principal risk for Exxon remains the political uncertainty and regulatory risks in Venezuela. The company is considering investing in a country that already nationalized its assets back in 2007 and has a history of instability, sanctions, and heavy government intervention.
Although the current administration appears more open to foreign investment, Venezuela's evolving legal and political framework remains largely untested. Another major challenge for Exxon will be Venezuela's aging oil infrastructure, as restoring roads, wells, pipelines, processing facilities, power systems, and export infrastructure will require substantial time and investment. also reported that while the Petromonagas upgrader is still in service, it will likely need maintenance and major repairs after decades of underinvestment. Exxon's potential return to Venezuela could present a long-term growth opportunity, giving the company access to a massive resource base while leveraging its heavy-oil expertise.
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