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Donald Trump promised oil executives at Mar-a-Lago in 2024 that they would get a “deal” if they donated lavishly to his presidential campaign. They did. Almost two years later, it’s safe to say Venezuela wasn’t part of the deal they signed up for.
In the aftermath of the U.S. military raid that removed Nicolás Maduro from power, Trump has talked up his belief that American oil companies will step in to help revive Venezuela’s battered oil industry. “A tremendous amount of money will have to be spent, and the oil companies will spend it, and then they’ll get reimbursed by us or through revenue,” he told NBC News.
Though smoke from the U.S. strikes has cleared over the Venezuelan capital of Caracas, its post-Maduro future is as cloudy as ever. U.S. oil giants aren’t on the same page as the White House on Venezuela, and that could jeopardize the president’s mercantilist ambition to tap into Venezuelan oil at his personal discretion. The U.S. is dictating Venezuela’s future, starting with assuming control over its oil sales and engineering a handover of at least a month of its oil production. The stage is set for Trump to huddle with oil executives from the largest U.S. companies on Friday.
Chevron and ConocoPhillips are among the oil firms publicly holding off on making new commitments in Venezuela. U.S. oil companies — with the notable exception of Chevron — ceased operations and left the country as their assets were expropriated by Venezuela’s socialist government in 2007. Chevron, though, has operated under a special license that allows it to pump a quarter of Venezuela’s daily output of heavy crude.
The American Petroleum Institute first issued a cautious statement that said it was monitoring developments in Venezuela while stressing the importance of U.S. energy dominance. An API staffer familiar with the situation told Quartz Washington that the trade group was caught off guard on the planning and execution of Trump’s intervention in Venezuela.
Politico reported on Monday that the Trump administration was “hopeful” that API would set up an advisory group to help the White House plan Venezuela’s future. The API staffer told me that the organization hadn’t actually been contacted by administration officials to do so yet.
The White House, though, believes oil companies will ultimately come around to its view. “All of our oil companies are ready and willing to make big investments in Venezuela that will rebuild their oil infrastructure,” Taylor Rogers, a White House spokeswoman, said in a statement. “American oil companies will do an incredible job for the people of Venezuela and will represent the United States well.”
A senior White House official told Quartz Washington that Secretary of State Marco Rubio and Energy Secretary Chris Wright are taking the lead in speaking with oil executives and the discussions have begun.
Other than Trump himself, Wright has been the administration’s point person this week for filling in the blanks on what’s next. He acknowledged at a Goldman Sachs energy summit that rebuilding Venezuela’s shattered oil sector would likely run into “the tens of billions of dollars.” The former oil CEO has also said he’s in touch with oil executives from Chevron, ExxonMobile, and ConocoPhillips in mapping out Venezuela’s future. He said on Thursday that Chevron was expected to “quickly” expand its Venezuelan operations. Spokespeople for the Texas-based oil giant did not respond to a request for comment.
A $100 billion headache
It’s hard to overstate the neglect and mismanagement that has left the Venezuelan oil sector in ruins. It has been crippled by years of technical brain drain, equipment theft, and corruption that knocked the petrostate from its position of power in global oil markets.
Even the state of North Dakota now produces more oil than Venezuela each day — 1.1 million barrels compared to 900,000, respectively. By comparison, Venezuela used to produce more than double that amount two decades ago. Venezuela’s state-owned oil company PDVSA is in awful shape, and the Trump administration is only slowly dialing back the sanctions in a brazen effort to coerce the rest of the post-Maduro government it left in power to change direction.
Restoring Venezuelan oil production to its record levels reached in the 1970s would require a huge influx of capital spending that probably unnerves even the most experienced oilmen. “From a purely technical standpoint, Venezuela could produce four to five times its current level of roughly one million barrels per day,” Francisco Monaldi, director of the Latin American Energy Program, Rice University’s Baker Institute, wrote on X. “Achieving that outcome, however, would require more than a decade of consistent effort and investments exceeding $100 billion dollars.”
For oil companies, it’s hard to justify massive new spending when putting more oil on the market would drive prices down even further. Oil markets are awash in the black stuff, with trading prices hovering at $58 per barrel in the last few days. There’s been no big swing in either direction, given Venezuela’s tiny piece of the current oil market — 1% to be precise. Analysts have long projected an oil glut this year that’s kept oil prices from spiking.
This is a new, volatile chapter in Trump’s presidency. First, it was Argentina to rescue a MAGA-style leader with a $20 billion bailout. Now it’s Venezuela to remove a leftist leader through military force. There’s no telling at what point Trump will pump the brakes on his appetite for intervention in Latin America and beyond, reminiscent of U.S. “gunboat diplomacy” in the 20th century.
In Trump’s view of the world, might is right and the U.S. should be granted free rein in the Western Hemisphere. “This is OUR Hemisphere,” the State Department wrote in a Monday social media post. The doctrine wouldn’t be out of place in the era of powerful nations carving up the globe into spheres of influence.
Some Republicans are sympathetic to the idea. “I think the fact that they’ve got large oil reserves and that those oil reserves right now have gone to the benefit of some of our adversaries, maybe it’s time under the Monroe Doctrine that we actually stop some of that from occurring,” Sen. Mike Rounds of South Dakota told Quartz. With sanctions in place, Venezuela’s biggest client for heavy crude is China.
For oil companies, it amounts to a “Darth Vader” moment, similar to how foreign governments have negotiated with Trump on tariffs that can change by the month. In Star Wars: The Empire Strikes Back, Darth Vader delivers a famous line: “I am altering the deal. Pray I don’t alter it any further,” Vader says.
If oil companies reach a Venezuela deal with Trump, they should be prepared for the terms to change at the speed of a Truth Social post.
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