Exxon Mobil Nears Preliminary Investment Deal With Venezuela Oil Fields

Exxon Mobil is nearing a preliminary agreement with Venezuela to explore investment in several oil fields, which could mark its return to the country after nearly two decades. According to Sina Finance, people familiar with the matter said Exxon Mobil could sign a memorandum of understanding with Venezuela's state oil company as soon as this month to discuss investment in several developed and undeveloped oil fields, though the talks could still collapse or run past September. One person familiar with the matter said the deal could cover fields with more than 50 billion barrels of underground oil reserves in total. Venezuela says it has about 300 billion barrels of oil reserves, the largest in the world. Exxon Mobil has sent teams to Caracas this year for talks on a potential deal as U.S. President Donald Trump pushes U.S. oil producers to help revive Venezuela's struggling oil industry. People familiar with the matter said discussions between Exxon Mobil and Venezuelan officials have gradually advanced over time, and are expected to continue this week at the Group of 20 energy ministers' meeting in Houston. Trump, U.S. Secretary of State Marco Rubio and others are trying to shift the global energy industry back toward the Western Hemisphere, encouraging companies to invest $100 billion in Venezuela to lift the country's weak crude output and send oil to U.S. refineries. Exxon Mobil's main rival Chevron signed a deal earlier this month to invest $7 billion through its joint venture in Venezuela over five years, with a goal of doubling output to 600,000 barrels per day. On September 16, billionaire oil tycoon Harold Hamm signed a preliminary agreement for his Oklahoma-based Continental Resources to explore an undeveloped oil field in Anzoategui state. Many major oil and gas companies remain hesitant to commit capital to Venezuela, fearing financial and legal problems from years of investment in a country with a record of nationalizing private assets. Exxon Mobil and ConocoPhillips are still seeking compensation for billions of dollars in losses after Hugo Chavez nationalized their assets in 2007. At a televised White House meeting with Trump in January, Exxon Mobil CEO Darren Woods and others expressed caution. Woods said at the time that Venezuela did not seem worth investing in unless its commercial framework, legal system and oil and gas laws changed significantly. Venezuela has since revised oil-related regulations, including allowing lower oil production tax rates. Continental Resources said in a September 16 news release that recent changes to the country's regulatory and legal framework were one reason the deal could move forward.