ExxonMobil signs memorandum to return to Venezuela after two decades away

In brief

• ExxonMobil has signed a memorandum of understanding with Venezuela to return to oil production there.
• The company has not operated in Venezuela since its assets were seized in 2007 under Hugo Chávez.
• The deal covers brown and green fields, and Venezuela expects oil-sector investment of close to $76 billion.

Memorandum opens the door to return

ExxonMobil signed a memorandum of understanding with Venezuela on Monday, November 9, setting out a path for the American oil major to resume production in the South American country (Ropný gigant ExxonMobil sa po dvoch desaťročiach vracia do Venezuely, podpísal predbežnú dohodu o ťažbe – HNonline.sk). The document was signed in Caracas in the presence of acting President Delcy Rodríguez and Dan Ammann, president of ExxonMobil Upstream, who described it as the first significant step in a longer process that he expects will bring the company back (Venezuela firma un memorando de entendimiento con ExxonMobil para el regreso de la petrolera al país – EL PAÍS).

Why the company left

ExxonMobil has had no presence in Venezuela since 2007, when its assets were seized during a wide nationalization of oilfields run by private firms under the government of Hugo Chávez.

What the deal covers

According to Rodríguez, the memorandum covers both brown fields, which already have infrastructure, and green fields, which would be developed from scratch, with reserves measured in billions of barrels. ExxonMobil is the second-largest oil company in the world, and the agreement would allow it to produce from those fields. Rodríguez said the company has the capacity, technology and investment needed for the work, and expressed hope that the memorandum would quickly turn into concrete contracts.

Wider context

Venezuela holds the largest proven oil reserves on earth, but years of sanctions, underinvestment and mismanagement crippled a sector that was once highly productive. Under pressure from US President Donald Trump, Caracas has opened its oil industry to foreign companies, and American firms have started to show cautious interest in investing after hesitating earlier in the year. Venezuela expects investment in its oil sector of close to $76 billion, according to figures cited in reporting on the opening.