The U.S. is reportedly in advanced discussions with the Venezuelan government about securing a direct ownership stake in the country’s vast oil resources.
According to Axios, the proposed deal would give the U.S. a stake in at least 17 of Venezuela’s most promising oil and gas fields.
Those fields hold an estimated 90 billion barrels of proven reserves, which would nearly double America’s current oil reserves.
One U.S. official quoted in the Axios report did not downplay the significance of the potential agreement: “Calling this deal huge would be an understatement. It is massive.”
Under the reported arrangement, U.S. oil companies would develop the fields and provide oil revenue back to Venezuela in return for those stakes.
Venezuela holds approximately 300 billion barrels of proven reserves, the largest in the world, yet its industry has never come close to tapping its full production potential.
The country currently produces about 1.1 million barrels per day, a fraction of the U.S. output of 13.7 million barrels per day, partly because its extra-heavy oil requires expensive extraction methods.
Venezuela’s output has also suffered from decades of underinvestment in oil infrastructure, with production falling sharply from a peak of over 3.5 million barrels per day in the 1960s.
Chevron (NYSE: CVX) stands out as the clearest potential beneficiary of any deal, having operated in Venezuela for over a century through joint ventures with affiliates of PDVSA.
This past April, Chevron consolidated its Venezuela heavy oil position through an asset swap, gaining a larger stake in Petroindependencia while its Petropiar joint venture received rights to develop the Ayacucho 8 area in the Orinoco Oil Belt.
That transaction is central to Chevron’s strategy to grow its Venezuelan production by 50% within the next two years, building on an already significant output increase.
Chevron has already boosted output by 40,000 barrels per day over recent years, bringing its Venezuelan production to over 250,000 barrels per day.
The Wall Street Journal has reported that Chevron is one of several U.S. oil companies nearing deals to invest billions of dollars into Venezuela’s oil fields, potentially adding two more joint ventures.
ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) both departed Venezuela more than two decades ago after the country nationalized their assets, but both are now evaluating a potential return.
Reuters reported in April that ExxonMobil and ConocoPhillips sent teams to Venezuela specifically to evaluate new investment opportunities in the country.
ConocoPhillips has been pursuing $12 billion in arbitration awards stemming from Venezuela’s 2007 nationalization of its assets, and that collection effort is likely to factor heavily into any reinvestment decision.
The New York Times reported in May that ExxonMobil was in talks to acquire the rights to produce oil in up to six fields in Venezuela, signaling serious intent to reenter the market.
According to the Wall Street Journal, neither ExxonMobil nor ConocoPhillips is currently among the group of companies set to join Chevron in the pending multibillion-dollar investment deal.
However, discussions for both companies are continuing, and a broader U.S. government deal granting direct stakes in Venezuelan fields could accelerate their return to the market.
Chevron remains the frontrunner given its uninterrupted presence in Venezuela, but the scale of the opportunity means all three oil majors could emerge as significant winners if commercial terms align.
