Chevron is close to adding two heavy-oil fields to its Venezuelan portfolio, and Halliburton is in talks to bring oilfield equipment to the country.
Executives from several US oil-and-gas companies are set to sign production deals in Caracas as early as next week. Energy Secretary Chris Wright is expected to make the trip as well.
US companies are piling into one of the world’s biggest oil producers, but the full picture is more consequential than the headlines suggest.
Venezuela’s oil rush begins
US forces seized former Venezuelan President Nicolás Maduro in January. Control of the country passed to his former vice president, Delcy Rodríguez, who has since aligned herself with the Trump administration.
Within weeks of Maduro's capture, Venezuela's National Assembly overhauled its oil legislation under US pressure, granting foreign companies greater control over their operations.
That legislative shift reversed much of the 2007 nationalization that had reshaped Venezuela's oil industry for nearly two decades.
President Trump has pushed US companies to invest in Venezuela since January, with the goal of boosting Western Hemisphere oil output and securing heavier crude supplies for American refineries. Venezuela holds some of the world's largest proven oil reserves.
What Chevron is actually agreeing to
Chevron already operates three joint ventures with Venezuela's state oil company, and accounts for roughly a quarter of the country's total production.
It's the only major US oil company still active there. The two new fields under negotiation would expand that footprint significantly.
Many of the fields Venezuela is offering are greenfields with little basic infrastructure and unreliable electricity. Bringing them into production would require billions of dollars and years of development.
Analysts and industry experts estimate it could take more than a decade for Venezuela to return to roughly 3M barrels a day, its production level before decades of decline.
Venezuela currently produces ~1.1M barrels per day, roughly in line with last year's output. Production has risen by nearly 300K barrels a day since Maduro's ouster, according to Bloomberg data.
Why Exxon and Conoco are sitting this out
ExxonMobil and ConocoPhillips are not participating, at least for now. Both companies are still seeking billions in restitution after Hugo Chávez nationalized their assets in 2007. That unresolved dispute is keeping them on the sidelines while negotiations continue.
Hunt Oil, a US independent with a history of operating in difficult jurisdictions, became the first company to sign an agreement to pump Venezuelan oil earlier this month. SLB also signed a contract with the Venezuelan government in the same period.
The bigger play running in parallel
The Chevron and Halliburton talks are separate from a different, larger negotiation. The Trump administration is in advanced discussions with Venezuelan leaders about the US taking a direct stake in 17 of the country's most promising oil fields.
Those fields collectively hold an estimated 90B barrels of proven reserves. Leases of up to 100 years on several of those fields are reportedly under consideration.
Bloomberg notes that some prominent Venezuelan figures, including Harvard professor and former Venezuelan minister Ricardo Hausmann, are questioning whether a foreign power controlling the nation's reserves is even constitutional.
The strategic rationale for Washington is straightforward. Greater access to Venezuelan reserves would boost US supplies at a time when the war in Iran and disruptions to shipping through the Strait of Hormuz are adding pressure to global oil markets.