Workforce security and policy reform including contract sanctity are among the prerequisites that have to be in place in Venezuela for the U.S. oil industry to move in, American Petroleum Institute President Mike Sommers said on Monday during a telephone conference with journalists.
He said the move to remove Nicolas Maduro from power earlier this month had been welcomed by the U.S. oil industry, adding that energy assets in the country were large enough to attract significant interest.
“Most of the reforms are going to have to happen in the country of Venezuela by Venezuelans, but we are confident that Secretary Rubio, Secretary Wright and Secretary Burgum will play a significant role in helping make that territory an area where investment is welcome for America, for American companies, to go in there and build the country back into a place of being an energy superpower again,” Sommers said.
The API is confident that the administration of President Donald Trump understands how important those concerns are, Sommers said.
On Sunday, Trump said that he might keep Exxon Mobil out of Venezuela after the oil major’s CEO called the country “uninvestable” during a White House meeting last week.
API SAYS FINANCIAL INCENTIVES UNNECESSARY FOR VENEZUELA
Trump has urged the U.S. oil industry to spend $100 billion to revitalize Venezuela’s oil industry. Sommers said on Monday that he didn’t believe any financial incentives were needed to get U.S. companies to return.
“It works best when markets provide the signal as to where people should develop and what resource should be developed,” he said.
Exxon, ConocoPhillips and Chevron – the three largest U.S. oil producers – had been key partners of Venezuela’s state oil company PDVSA before former President Hugo Chavez nationalized the industry between 2004 and 2007.
While Chevron negotiated deals to partner with PDVSA and remained in the country, ConocoPhillips and Exxon left and are now owed over $13 billion collectively. ConocoPhillips CEO Ryan Lance told Trump last week that his company is the largest non-sovereign creditor to Venezuela and called for a restructuring of PDVSA.
Debts from previous asset expropriations will be a “significant hurdle for many companies that may be concerned about investing in this resource,” Sommers said.
While the prolific Orinoco heavy crude belt – where most of Venezuela’s reserves are located – will require significant capital and investment to boost production, Sommers said that Chevron may be able to find some incremental barrels around Lake Maracaibo in the western part of the country.
(Reporting by Valerie Volcovici in Washington and Sheila Dang in Houston; Editing by Chris Reese, Nathan Crooks and Diane Craft)