“A single tweet can change foreign policy; who dares to invest in Venezuela?” U.S. oil companies: No guarantees, no investment.
American oil giants are extremely cautious about returning to the Venezuelan market. Although President Trump is leveraging his strong influence over energy markets to pressure companies to invest, the industry widely demands Washington to provide clear legal and financial guarantees.
Faced with the White House’s ambition to reshape the global energy landscape, American energy company executives are unconvinced, fearing that unpredictable policies will expose huge capital to risks that cannot be borne.
In the latest move, President Trump demonstrated tough control over the global crude oil market. According to CCTV News andXinhua News Agency, Trump not only announced the takeover of Venezuela’s oil sector, but also ordered US special forces to seize a Russian oil tanker in the North Atlantic. At the same time, US Energy Secretary Chris Wright held a key meeting in Miami on Wednesday with top executives of Chevron and ConocoPhillips, conveying Trump’s intention for US oil giants to invest billions of dollars in Venezuela’s severely damaged energy sector.
In response, oil industry executives plan to pressure the president at a White House meeting on Friday, demanding strong guarantee measures from the government before committing capital investment. Even though Trump hinted earlier this week that companies investing in Venezuela may be reimbursed by the US government or compensated from revenues, executives remain deeply concerned. Previously, the White House had stated that Washington would "indefinitely" control Venezuela’s oil resources and is arranging for US chartered ships to transport millions of barrels of crude oil to refineries in the US Gulf of Mexico for processing.
This dramatic geopolitical change has directly impacted investor confidence. The market is generally worried that the political and legal risks of Venezuelan projects and the low oil price environment will hinder the success of substantial investments. An energy-focused private equity investor told the Financial Times of the UK, “If a tweet can arbitrarily change the country's foreign policy, no one would want to get involved.” This uncertainty means that even if the US government signals a relaxation of some sanctions and allows oilfield service companies to enter, in the short term, it is unlikely to bring a large influx of infrastructure capital.
Lack of Guarantee Mechanisms Blocks Capital Entry
US energy companies generally believe that unless they obtain formal government backing, it is difficult to carry out large-scale projects in Venezuela. People familiar with the plans told the Financial Times of the UK that at the upcoming White House meeting, executives from energy giants including Chevron, ExxonMobil International, and ConocoPhillips are expected to make it clear to the president that strong legal and financial guarantees are required.
A senior executive at a large US energy company told the Financial Times to get big companies back into Venezuela, the government must provide “serious guarantees.” He pointed out that it will take some time before real investments are made, and even longer to increase production. Neil McMahon, co-founder of Kimmeridge, also emphasized that given the repeated losses companies have suffered in the past, companies will not commit funds without formal financial guarantees.
Private equity investors are also adopting a wait-and-see attitude. A leading private equity investor said that while his company is ready to begin assessing projects, the risks in Venezuela are extremely high. He warned that unless the government provides guarantees, no publicly listed company responsible to its shareholders would invest capital in a country lacking a complete legal system and facing asset confiscation risks.
Policy Uncertainty Raises Long-Term Concerns
Beyond the current legal framework issues, investors are also concerned about policy continuity beyond presidential terms. Amos Hochstein, managing partner at investment group TWGGlobal and a former advisor to President Biden, pointed out that investing in Venezuela is filled with legal, financial, and political risks. He emphasized that after companies invest funds over the next three years, the ROI period will be delayed, and by that time, Trump may no longer be president, so companies need to know whether they can still be protected beyond Trump’s term.
Additionally, who to sign agreements with is a crucial issue. Hochstein questioned: “US companies need to know who their counterparties are. Are they signing agreements with the Venezuelan government? Is that government legitimate?” Such doubts about the legal framework of contracts and regime legitimacy add to the risk aversion of capital.
Energy Secretary Chris Wright also acknowledged this reality at the Goldman Sachs conference in Miami, saying that US oil giants won’t invest billions of dollars in Venezuelan new infrastructure next week. Although Chevron is currently the only company with a US license to export Venezuelan crude, and is seeking to amend its agreement to sell more oil, its CFO Eimear Bonner remained cautious at a closed-door meeting on Tuesday and revealed no plans for any near-term expansion.
Ambitions and Resistance to Reshaping the Global Energy Order
The Trump administration’s takeover of Venezuela’s oil sector is seen as part of its global agenda. Bill Farren-Price of the Oxford Institute for Energy Studies noted that, following actions against Iran and Nigeria, Venezuela is the third OPEC oil-producing country targeted by the US in the past year. He believes this global agenda is trying to reshape world energy trade on America’s terms and conditions.
However, this grand plan faces pushback from the business sector at the implementation level. While the US government has signaled it will allow American oilfield service companies to operate in Venezuela and is beginning to lift some sanctions that hinder the country’s economy, industry executives believe that administrative orders and political pressure alone are not enough to offset real commercial risks.
For energy giants accustomed to long-term planning and stable returns, Venezuela’s current environment remains a “high-risk area.” A private equity investor summed it up: “In an environment where foreign policy can be changed by a random social media post, capital’s instinct is to avoid risk, not to take it.”
Risk warning and disclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their individual circumstances. Investment made accordingly is at your own risk.