Alex Krainer
On Friday, 10 January, President Trump
convened nearly two dozen oil and gas executives at the White
House—Chevron, ExxonMobil, ConocoPhillips, Shell, and others—to pitch
them on rebuilding Venezuela’s oil infrastructure following last
weekend’s military operation to capture Nicolás Maduro.
Trump’s apparent objective was to get the U.S. oil companies to invest
$100 billion to revitalize Venezuela’s dilapidated oil infrastructure,
claiming the country would offer “total safety, total security” for
operations. Oil executives weren’t too enthused and that in itself has
been one of history’s teachable moments. Let’s see what happened (and
why):
Is Venezuela’s oil sector uninvestable?
ExxonMobil CEO Darren Woods
told officials Venezuela is “uninvestible” and that “a number of legal
and commercial provisions would have to be established to even
understand what kind of returns we would get on the investment”. Woods
elaborated that significant changes must be made to commercial
frameworks, the legal system, and hydrocarbon laws in the country, with
durable investment protections required. For context, Exxon left
Venezuela in 2007 when the Chavez regime nationalized the oil industry.
Oil fracking billionaire and major Trump donor Harold Hamm
expressed skepticism: many more assurances would be needed before he
could back the administration’s investment plans, describing Venezuela
as having “its challenges” and noting “there’s a huge investment that
needs to be done”.
What Trump Offered (and Didn’t)
Trump
said the companies don’t need US federal funding but “need government
protection and the government security” to operate safely in the
country. Yet when pressed on specifics—whether the administration would
provide a financial backstop if Venezuela destabilizes—Trump replied
only that “they know the risks” and companies would be “safe”, without
offering any specific commitments.
Trump signed an executive order
on Friday protecting US-held money derived from sales of Venezuelan
oil, and claimed Venezuela agreed the US will immediately begin refining
and selling up to 50 million barrels of Venezuelan crude oil, which
will continue indefinitely. But legal frameworks for long-term
operations remain undefined.
The Only Quasi-Commitment
Chevron,
the last US company operating in Venezuela, told federal officials it
sees a pathway to grow their production by 50% in the next 18 to 24
months but did not commit financially. Note the careful phrasing:
expanding existing operations is vastly different from committing fresh capital to new infrastructure.
After
the meeting, Chevron issued a statement thanking Trump “for his
leadership and support of American energy”—the diplomatic equivalent of a
handshake while backing toward the exit.
The Unresolved Problem: Past Seizures
ConocoPhillips CEO Ryan Lance
lauded Trump’s focus but noted his company has sought billions from
Venezuela after its assets were effectively seized, describing
ConocoPhillips as Venezuela’s largest non-sovereign credit holder.
Trump’s response? “We’re going to start with an even plate” and “we’re
not going to look at what people lost in the past”.
Translation:
Companies that lost billions to Chavez-era nationalizations should eat
those losses and start fresh. This is precisely the kind of arbitrary
sovereign risk that makes oil majors reluctant to deploy capital.
Energy Secretary’s Hedging
When Energy Secretary Chris Wright
was asked if any firm commitments had been made following the meeting,
he told CNN there was “tremendous interest” but didn’t say that any
deals had been reached. Wright said the $100 billion Trump mentioned
would be what it would take to grow the country’s oil industry over the
next decade if Venezuela “is peaceful and becomes a more rule of law,
better operating environment”. That’s a timeline admission: decade-long
horizon, conditional on political stability that doesn’t currently
exist.
The teachable part
The
meeting revealed the gap between the perceived “value” that’s available
to oil corporations to exploit and the more complex realities that
shape their executives’ decision making. They might like to “own”
Venezuela’s oil, develop it and bring it to markets, but in reality, it
would be much easier, less costly and less risky for them to simply buy
that oil from Venezuela’s own oil monopoly, PEDEVESA.
It is
important to take note of this because when we consider the modern
history of Western colonialism, multinational corporations play a very
visible role and appear, along with imperial powers’ military
organizations, as the main culprits of the exploitative imperialism that
often devastates their target countries while enriching the corporate
executives and shareholders. But corporations - oil companies included -
have options in how they can enrich themselves. To them, oil is
merchandise, and their business is reselling it with a margin of profit.
How they get
that oil is secondary: they can extract it themselves, or acquire it
from whoever else extracts it. Their driving incentive is their profit
margin. But to the financiers behind exploitative imperialism, oil is
not merchandise - it’s collateral. It is to them, and only to them, that
political control over a resource rich region makes all the difference:
they only profit by issuing loans to their clients (like Exxon or
Chevron). But to do that, they would need to have control of the
underlying resources as collateral.
Trump assembled the wrong audience
Had
Trump assembled a meeting of oil industry’s bankers, he would have
encountered much greater enthusiasm for Venezuela’s oil sector, and
probably some pressure to actually change Venezuela’s regime and instill
the nobel prize winner Maria Corinna Machado
as president. The problem is that native populations are never content
to be colonized and used as slave labor. In the good old days of
colonialism, before there were social media networks, this wasn’t so
difficult to solve: you’d simply depopulate the region in question and
bring slave labor from elsewhere.
This is exactly how
nearly 100% of the native population of the Caribbean was exterminated
and replaced with slaves from Africa. Today, with millions of video
cameras deployed everywhere and streamed in real time to hundreds of
millions of people around the world, the problem of uppity natives is
much more complicated. Especially when up to 3 million of those natives
have been trained for insurgency and carry weapons.