Exxon Mobil Explores Return to Venezuela After 19 Years

US energy giant Exxon Mobil is reportedly exploring opportunities to return to Venezuela after a 19-year absence. This move marks a significant shift in the company’s strategy towards the world’s largest oil reserves nation, despite major challenges remaining. According to reports, Exxon recently sent a technical team to assess the heavy oil Cerro Negro project in the Orinoco Belt. The project was previously operated by Exxon until 2007, before being nationalised under Hugo Chávez’s government. In addition to the technical team, several US executives are said to have visited Caracas to discuss potential future investments. Despite the interest in returning, Exxon’s technical team reportedly expressed disappointment with the field conditions they encountered. Years of mismanagement have left Venezuela’s energy infrastructure in ruins. The upgrader facilities, which convert heavy crude into lighter synthetic oil, require extensive repairs. Initial estimates suggest that restarting operations in the area would require billions of dollars in upfront investment. Damaged oil wells, widespread environmental issues, and chronic power shortages are key obstacles that could delay production increases for years. Exxon Mobil CEO Darren Woods has softened his stance in recent months. Earlier this year, Woods described Venezuela as unsuitable for investment without drastic legal reforms. However, in the latest earnings report, he referred to Venezuela as a major resource that is now beginning to open up to the world. This shift in tone is believed to be influenced by geopolitical dynamics and competition with domestic rivals such as Chevron, the only major US company currently active there. Additionally, having assets in Venezuela could provide strategic advantages for Exxon in safeguarding its interests in neighbouring Guyana. Infrastructure issues are not the only hurdle. Chevron spokesperson Susana Brugada recently highlighted in a Caracas forum how power outages severely disrupt oil operations. A single power cut can instantly disable dozens of wells, significantly reducing national output. Besides Exxon, other companies such as ConocoPhillips are also monitoring the situation while awaiting clearer contract rules from the Venezuelan government. Exxon has declined to comment officially on the details of the talks, but the momentum for Western energy firms to return to Venezuela appears to be growing under close global market scrutiny. (WSJ/I-2)