Venezuela's Oil Ambitions Face Reality Check as Exxon, Chevron Hold Back New Investment
In a clear signal that geopolitical optimism must be backed by tangible reforms, the two largest U.S. oil companies, ExxonMobil and Chevron, have indicated they will not increase capital spending in Venezuela this year. The announcements, made during fourth-quarter earnings calls, underscore a wait-and-see approach as the country's government attempts to overhaul its oil and gas laws to attract foreign investment.
The stance places the companies at odds with recent rhetoric from former President Donald Trump, who has suggested U.S. firms could invest over $100 billion to rebuild Venezuela's crippled oil infrastructure. ExxonMobil CEO Darren Woods drew Trump's ire earlier this month by bluntly labeling the country "uninvestable" without major reforms, a position he reiterated. The memory of Exxon's assets being nationalized in 2007 remains a fresh wound for the company.
"We believe in the long-term resource potential," Woods stated, referencing Venezuela's massive extra-heavy crude reserves. "But the challenges of stability, fiscal terms, and the high cost of development are significant. Our expertise from Canada's oil sands is applicable, but it requires a viable framework to deploy." Exxon plans to send a technical team for assessment but has committed no new funds.
Chevron, operating in Venezuela under a U.S. special license, presents a contrasting yet equally cautious case. It currently produces about 250,000 barrels per day—roughly a quarter of the nation's output—through self-funding joint ventures with state-owned PDVSA. CEO Mike Wirth said production could rise 50% within two years without additional capital, but that would only nudge national output to just over 1.1 million bpd, a far cry from its historical peak near 4 million.
"It's premature to define our long-term outlook," Wirth cautioned. "We need to see stability and confidence in the fiscal regime. Any future investment must compete for capital against opportunities we have worldwide." He emphasized Chevron is closely reviewing newly proposed hydrocarbon laws.
Broader Context & Regional Rivalry
The Venezuelan hesitation comes as both companies tout record production elsewhere. Exxon highlighted output from the Permian Basin and its booming offshore operations in Guyana—a source of tension with Venezuela, which claims part of Guyana's territory. An ongoing international arbitration over the maritime border is being closely watched, as a favorable ruling could unlock more exploration for the consortium Exxon leads, which now includes Chevron following its acquisition of Hess.
Financially, both giants beat quarterly earnings estimates but are navigating a lower price environment. Exxon reported Q4 earnings of $6.5 billion (down 15% YoY), while Chevron earned $2.8 billion (down nearly 15%).
Expert & Stakeholder Reactions
"This is a classic case of corporate pragmatism overriding political theater," said Marcus Thorne, an energy strategist at Alvarez Capital. "The companies are saying, 'Show us the legal framework and stability, then we'll talk money.' They've been burned before and won't be rushed."
"It's outrageous hypocrisy," countered Elena Rodriguez, a Caracas-based political analyst and former PDVSA consultant. "They profit from our resources under license, promise future billions to appease politicians, but offer no real commitment to rebuild the industry they helped drain. It's extraction under a new guise."
David Chen, a portfolio manager focused on emerging markets, offered a measured view: "The incremental, self-funded approach from Chevron is the only viable model right now. It mitigates risk. For Exxon, Venezuela is a potential long-term option, but Guyana and the Permian are the current priorities. The ball is in Venezuela's court to create a competitive investment climate."
This analysis is based on original reporting from Fortune.com.