Chevron Puts $7 Billion on Venezuela; Exxon Says Not So Fast

Chevron is investing $7 billion in Venezuela to double its oil output to 600,000 barrels a day by 2031, while ExxonMobil CEO Darren Woods says he'll wait — and take recent deal rumors with a "little pinch of salt."

Woods laid out his position on Exxon's third-quarter earnings call on Friday, a month after reports said the company was close to signing a memorandum of understanding to explore Venezuelan oilfield investments. "It's going to require some substantial changes to the way things have historically been done in Venezuela. There is progress being made on those areas," Woods said, pointing to changes in the fiscal and legal frameworks. "A number of things are in progress, but there's a way to go."

His calculus is rooted in history. Exxon has had assets nationalized in Venezuela twice, most recently in 2007. In January, Woods said at the White House that Venezuela was "uninvestible" — a comment about that moment in time that still irritated President Donald Trump after the U.S. military ousted former leader Nicolás Maduro. "I didn't like their response. They're playing too cute," Trump said of Exxon at the time. Woods said Friday his rhetoric hasn't changed since January, though he believes Exxon "ultimately will have a role" in the country.

What is Exxon waiting for?

Woods set a clear bar before any commitment: legal and fiscal reform, plus confidence in the economics. "We're going to make sure that before we commit that those are in place, and we have confidence that we have a viable project that's sustainable and will generate the returns required to compete in our portfolio," he said. "I expect that to take time. We're working our way through it. We're not in a rush."

He added that succeeding in Venezuela requires scale, and only a few companies — Exxon among them — have the resources to pull it off. In plain terms: Exxon sees the prize, but it won't write a check until the rules change.

Who else is moving in?

Plenty of players aren't waiting for Exxon:

• Continental Resources, the top private U.S. oil and gas producer, founded by billionaire Trump ally Harold Hamm, signed an MOU with state oil company PDVSA last month to develop a major area in the Orinoco Belt.
• The Trump administration announced in late August what Trump called the "biggest oil deal in world history": U.S. control of more than 65 billion barrels of proven reserves across 17 Venezuelan oilfields, run through North American Blue Energy Partners, with the U.S. Department of Defense owning a 35% stake and controlling a majority of production. Many details remain unknown.
• BP and Shell plan to invest in offshore Venezuelan gas fields near Trinidad and Tobago.

How fast is Chevron scaling?

The ramp is already visible. Chevron has lifted volumes 20% this year, from 250,000 to 300,000 barrels daily, and targets 600,000 by 2031. Nationwide, Venezuela's output has climbed from under 1 million barrels a day to more than 1.2 million in October — still far below its decades-ago peak of nearly 4 million, despite holding the world's largest proven reserves on paper.

CEO Mike Wirth said Chevron's incumbency gives it the edge. "As the only incumbent on the ground, we definitely have an advantage in terms of our understanding of the geology, the infrastructure," Wirth said. Chevron never left Venezuela, working out a deal with the Maduro regime and remaining the country's top private producer.

He also argued the bet isn't especially risky because it becomes "self-funding" after the initial investments. "It will be recovered quickly. It's a factory-type drilling program," Wirth said. "And we can manage the pace of activity up or down as market conditions call for it."

The contractual terms are now "much more competitive," Wirth said, including clauses on political stability and international arbitration comparable to other countries where Chevron operates. Chevron — not PDVSA — will control the flow of the oil it produces and the royalties and taxes it pays. "To me, the best way to manage those risks is to have support of the people in the country and that leads to an environment where you can resolve any differences that may emerge," Wirth said.

The split sets up a natural test: if Chevron hits 600,000 barrels by 2031, Exxon's methodical wait will look expensive in hindsight.