Trump and Big Oil aren’t on the same page about Venezuela

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Donald Trump promised to oil executives at Mar-a-Lago in 2024, they would have gotten a “deal” if they donated generously to his presidential campaign. They did. Nearly two years later, it is safe to say that Venezuela was not part of the agreement they signed.

In the aftermath of the U.S. military raid that toppled Nicolas Maduro from power, Trump expressed his belief that U.S. oil companies would step in to help revive Venezuela’s ailing oil industry. “A lot of money will have to be spent, and the oil companies will spend it, and then they will be reimbursed by us or through revenue,” he told NBC News.

Although the smoke from US strikes has cleared over Caracas, the Venezuelan capital, its post-Maduro future is murkier than ever. America’s oil giants are not on the same page as the White House on Venezuela, which could jeopardize the president’s mercantilist ambition to exploit Venezuelan oil at his personal discretion. United States dictates Venezuela’s future, starting with taking control of its oil sales and arranging a transfer of power. at least a month of its oil production.

The stage is set for Trump to meet Friday with oil executives from the West’s largest multinational corporations, alongside Secretary of State Marco Rubio, Energy Secretary Chris Wright and Interior Secretary Doug Burgum. Executives from Chevron, ExxonMobile, ConocoPhillips, Continental Resources, Halliburton and Marathon Petroleum are expected to be present on the American side, according to a White House official. European companies are also well represented: Repsol, Shell and Eni. Trump said Thursday night that oil companies had committed to spending $100 billion in the country.

Chevron and ConocoPhillips are among the oil companies publicly hesitant to make commitments in Venezuela. U.S. oil companies – with the notable exception of Chevron – have ceased operations and left the country, their assets expropriated by Venezuela’s socialist government in 2007. Chevron, however, operates under a special license allowing it to pump a quarter of Venezuela’s daily production of heavy crude. It has had to face intense political and economic turbulence to maintain its presence in the country, with the government having notably imprisoned some of its employees.

The American Petroleum Institute initially issued a cautious statement saying it was monitoring developments in Venezuela while emphasizing the importance of U.S. energy dominance. An API member familiar with the situation told Quartz Washington that the trade group was caught off guard in the planning and execution of Trump’s intervention in Venezuela.

Policy reported Monday that the Trump administration “hoped” that the API would create an advisory group to help the White House plan for Venezuela’s future. The same API staffer said the organization had not yet been contacted by administration officials to do so.

The White House, however, believes that the oil companies will eventually come around to its point of view. “All of our oil companies are ready and willing to make large investments in Venezuela to rebuild their oil infrastructure,” White House spokesperson Taylor Rogers said in a statement. “American oil companies will do an incredible job for the Venezuelan people and represent the United States well. »

Rubio and Wright take the lead in convincing oil executives to invest in Venezuela.

In addition to Trump himself, Wright this week served as the administration’s point person to fill in the gaps on what happens next. He acknowledged at a Goldman Sachs energy summit that rebuilding Venezuela’s broken oil sector would likely cost “tens of billions of dollars.” The former oil CEO also said he was in contact with oil executives from Chevron, ExxonMobile and ConocoPhillips to plan Venezuela’s future. He said Thursday that Chevron should “rapidly” expand its operations in Venezuela. Spokespeople for the Texas-based oil giant did not respond to a request for comment.

A 100 billion dollar puzzle

It is difficult to overstate the negligence and mismanagement that has left Venezuela’s oil sector in ruins. It has been crippled by years of technical brain drain, equipment theft and corruption that caused the petrostate to lose its position of power in global oil markets.

Even the state of North Dakota now produces more oil than Venezuela every day – 1.1 million barrels versus 900,000, respectively. By comparison, Venezuela produced more than double that amount twenty years ago. Venezuela’s state-owned oil company PDVSA is in dire shape, and the Trump administration is only slowly reducing sanctions in a brazen effort to force the rest of the post-Maduro government it left in power to change direction.

To restore Venezuelan oil production to its record levels reached in the 1970s, it would be necessary a massive influx of capital spending this probably baffles even the most experienced tankers. “From a purely technical perspective, Venezuela could produce four to five times its current level of about a million barrels per day,” Francisco Monaldi, director of the Latin American Energy Program at Rice University’s Baker Institute. wrote on X. “However, achieving this result would require more than a decade of constant effort and investments exceeding $100 billion. »

For oil companies, it is difficult to justify massive new spending when putting more oil on the market would lower prices even further. Oil markets are awash with the dark stuff, with prices hovering around $58 a barrel in recent days. There hasn’t been a big change in either direction, given Venezuela’s small share of the current oil market – 1% to be precise. Analysts have long predicted an oil glut this year that would keep oil prices from soaring.

This is a volatile new chapter in Trump’s presidency. First, he was Argentina to save a MAGA-style leader with a $20 billion bailout. It is now up to Venezuela to overthrow a left-wing leader by military force. It is unclear when Trump will curb his appetite for intervention in Latin America and beyond, which is reminiscent of American “gunboat diplomacy” in the 20th century.

In Trump’s worldview, might is right and the United States should have free rein in the Western Hemisphere. “This is OUR hemisphere,” the State Department wrote in a statement released Monday. social media post. This doctrine would not be out of place in the age of powerful nations dividing the globe into spheres of influence.

Some Republicans favor the United States becoming a more interventionist state. “I think the fact that [Venezuela has] “We have significant oil reserves and those oil reserves have benefited some of our adversaries right now. Maybe it’s time, under the Monroe Doctrine, to prevent that from happening,” Sen. Mike Rounds of South Dakota told Quartz. Venezuela’s biggest customer for heavy crude is China.

For oil companies, it amounts to a “Darth Vader” moment, similar to how foreign governments negotiated with Trump over tariffs that can change month to month. In Star Wars: The Empire Strikes BackDarth Vader delivers a famous sentence: “I’m changing the agreement. Pray you don’t change it further,” Vader said.

If oil companies reach a Venezuela deal with Trump, they should prepare for conditions to change at the speed of a Truth Social article.