- ExxonMobil has signed a non-binding memorandum of understanding with Venezuela’s state-owned PDVSA to evaluate potential upstream opportunities.
- The company says future investments will depend on stable policies, clear regulations, strong investment protections and competitive returns.
ExxonMobil has signed a preliminary agreement with Venezuela’s state-owned oil company, Petróleos de Venezuela (PDVSA), to explore potential upstream investment opportunities in the South American country.
The agreement takes the form of a non-binding memorandum of understanding (MoU), allowing both companies to evaluate possible opportunities in Venezuela’s oil sector.
ExxonMobil announced the agreement on Monday but did not identify the specific projects or oil areas under consideration. The development could mark a significant step towards the company’s return to Venezuela, nearly two decades after the government of former President Hugo Chávez expropriated its previous assets.
Investment Depends on Regulatory Guarantees
ExxonMobil said the agreement represents an initial step but stressed that any future investment would require stable policies, clear regulations, strong investment protections and competitive returns.
A final joint venture contract or production-sharing agreement would be necessary before the company could formally participate in exploration or production activities.
The company’s position reflects concerns about the protection of foreign investments and the long-term commercial viability of projects in Venezuela. ExxonMobil Chief Executive Darren Woods previously described the country as uninvestable, citing the need for stronger legal and fiscal protections. However, he later acknowledged progress following reforms to Venezuela’s oil sector.
ExxonMobil’s Previous Operations in Venezuela
Before the expropriation of its assets, ExxonMobil operated the Cerro Negro heavy crude project, now known as Petromonagas, with a 41.67 per cent stake.
The company also held a 50 per cent interest in the La Ceiba project in the southern Maracaibo Basin.
Following the expropriation, ExxonMobil affiliates initiated arbitration proceedings against Venezuela through the World Bank’s International Centre for Settlement of Investment Disputes in 2007. In 2014, the tribunal awarded ExxonMobil $1.6 billion, plus interest dating from 2007. Venezuela challenged the award, and the dispute remains pending.
Oil Sector Reforms Could Support a Return
Reuters reported that ExxonMobil had expressed interest in returning to the Petromonagas project and evaluating neighbouring areas in the Carabobo block.
Petromonagas operates one of the few facilities capable of upgrading Venezuela’s extra-heavy Orinoco crude into lighter grades suitable for export. Recent reforms introduced under interim President Delcy Rodríguez have opened parts of the country’s energy sector to new investors.Woods said the changes had improved fiscal and legal terms but maintained that ExxonMobil would take time to assess the investment environment.
He said the company would only commit capital when it had confidence that a project could deliver sustainable and competitive returns.