By Collin Eaton and Kejal Vyas
Exxon Mobil is in talks with Venezuelan officials about returning to the oil-rich country after a 19-year exile. Yet many of the challenges that have long prevented American companies from making big investments there still plague the country.
The oil giant recently sent a technical team to survey the Cerro Negro heavy-oil project that it operated until 2007 when Hugo Chávez nationalized much of the country's energy infrastructure. A group of U.S. executives also journeyed to Caracas to discuss potential investments.
The team left disappointed with what they found in northeastern Venezuela's Orinoco Belt, according to people familiar with the matter. The project was in a ruinous state -- its upgrader, a facility that turns heavy crude into a lighter synthetic oil, needed major repairs. Oil wells across the region have sustained damage after years of mismanagement. Relaunching operations there would require billions of dollars in upfront investments, the company concluded.
Furthermore, talks with the emissaries of Venezuela's new government haven't been as fruitful as Exxon had hoped, the people said. In meetings in Caracas and Houston, the parties have yet to agree on contract terms that would tempt the company to risk entering the country. Even if they do reach a deal, a substantial rise in oil production is expected to take years to materialize given how long it would take to fix widespread environmental problems, solve electricity shortages and repair equipment.
Exxon, which was also kicked out of Venezuela in a nationalization push in the 1970s, remains focused on recouping all of the more than $1 billion it says it was owed in restitution -- and it isn't convinced Venezuela will soon pay off that debt, some of the people said. The company, though, still wants to find a path forward.
"Until there's a clear definition of the government's take, it's going to be quite hard to sign [a contract] with a new operator such as Exxon, " said José Ignacio Hernández, a law professor and consultant at Aurora Macro Strategies. "What is the amount of royalty? What is the amount of extraction integrated taxes?"
Exxon declined to comment.
The dilemma facing Exxon is consequential because Venezuela is home to some of the world's largest oil reserves. As the biggest energy company in the U.S., Exxon prides itself on its ability to find and extract fossil fuels hidden deep in the earth's crevices. Passing up the chance to tap those reserves would be difficult, especially when rival Chevron is potentially primed for a windfall as the only big American company active there.
Meanwhile, having assets in Venezuela could give Exxon a geopolitical advantage and protect its interests in neighboring Guyana, where the company is pumping oil from a generational discovery. Before the U.S. ousted Nicolás Maduro, the strongman deployed military assets within reach of the Exxon-led project in Guyana's Stabroek oil block.
Closer to home, securing a deal in Venezuela would endear Exxon to President Trump, who is pushing for U.S. energy companies to invest $100 billion to repair the country's dilapidated oil-and-gas infrastructure.
Exxon CEO Darren Woods's position toward Venezuela appears to have softened lately. On the company's earnings call earlier this month, he called Venezuela "a huge resource that's now opened up more freely to the world."
That's a big shift from January when Woods said at a White House meeting that Venezuela was "uninvestable" without significant changes to its commercial frameworks, legal system and hydrocarbon laws. Those comments drew the ire of Trump, who threatened to block Exxon from the country.
Relaunching the Cerro Negro project or starting up a new one would be costly for Exxon. The alternative to using the upgrader -- a facility designed to process 120,000 barrels of heavy crude a day -- would be to blend the crude with diluents, which would squeeze the company's margins.
Repairs would cost several hundred million dollars, one of the people familiar with the matter said . Fully rebuilding the project's infrastructure could cost as much as $5 billion, and new projects -- with more advanced upgrading facilities and higher production capacity -- could cost as much as $10 billion.
ConocoPhillips and other U.S. energy companies are also waiting for Venezuela to complete new contract rules that would clarify the government's cut of any foreign fossil-fuel investments. Representatives from the U.S. oil industry have flocked to Caracas in recent weeks to seek an audience with Venezuela's interim president, Delcy Rodríguez, to discuss potential investments.
Some have walked away stunned by the scope of the destruction in Venezuela's oil fields. Power shortages, damaged roads and persistent security risks are ongoing challenges.
At a forum in Caracas last week, Chevron spokeswoman Susana Brugada said the country's power outages have a devastating impact on oil operations.
"Every time one of those major power failures occurs -- the kind where everyone's refrigerator starts to suffer and our computers crash -- just imagine what that does to the oil wells," she said in comments broadcast by local TV network Televen.
"A single power flicker can knock out 40 wells in the blink of an eye; and it's not as if the power comes back on and those 40 wells immediately spring back to life. When we do the math on their potential output, we are talking about a genuine reduction in national production."
Yet momentum is still building in Venezuela. Chevron recently agreed to an asset-swap deal that would expand its footprint. In early May, some smaller companies -- including Hunt Oil, Crossover Energy, HKN Energy and Mercuria Energy Group -- signed memorandums of understanding to explore new drilling and trading opportunities.
MOUs are nonbinding and are seen by many in the oil industry as an expression of interest in striking a deal. Any agreements reached in the near term with Exxon and Conoco are expected to be MOUs.
Conoco CEO Ryan Lance recently told Bloomberg that Venezuela still has a lot of work ahead of it to attract oil-company investments.
Conoco, which maintains that Venezuela owes it more than $12 billion in restitution for the nationalization of its assets, is evaluating opportunities.
"As with any potential investment, decisions will be guided by a range of factors, including economic and policy stability, safety, adherence to the rule of law, and market competitiveness," a Conoco spokesman said. "Any decision to proceed would need to take into account mechanisms to recover the debt that is owed."
Write to Collin Eaton at collin.eaton@wsj.com and Kejal Vyas at kejal.vyas@wsj.com
(END) Dow Jones Newswires
May 28, 2026 12:00 ET (16:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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