By Sheila Dang, Marianna Parraga and Deisy Buitrago
HOUSTON/CARACAS, Nov 11 (Reuters) – A preliminary agreement between ExxonMobil, the Venezuelan government and state oil company PDVSA allows the US oil producer to evaluate seven areas for development that include undeveloped fields, mature areas and an exploration block, four people close to the matter said.
The sources provided details about a memorandum of understanding that Exxon and PDVSA signed on Monday in Caracas in the presence of interim Venezuelan President Delcy Rodriguez.
Depending on the final composition of any portfolio in the country it ultimately secures, Exxon could re-enter Venezuela in an advantageous position, especially if it can create efficiencies with its operations in neighboring Guyana and Trinidad and Tobago. Exxon leads the consortium that develops Guyana’s prolific Stabroek block and is the sole rights holder to a large deepwater exploration area in Trinidad and Tobago.
Under the preliminary pact with Venezuela, which is non-binding, Exxon has exclusive rights for one year to negotiate contract terms and view subsurface and other data for the fields, one of the people said. The arrangement is similar to ones other foreign companies have negotiated this year for entry into the country’s energy sector.
Exxon declined to comment beyond a statement issued on Monday which called the memorandum a “meaningful first step.” Venezuela’s oil ministry and PDVSA did not immediately reply to requests for comment.
Venezuela had offered Exxon a different mix of areas earlier this year, which the company rejected. Discussions have since mainly focused on several heavy oil blocks in Venezuela’s largest output region, the Orinoco Belt, including one where Exxon operated before its assets were expropriated in 2007.
Exxon is evaluating a return to Petromonagas — previously called Cerro Negro, one of the few projects that has an operational upgrader to turn extra-heavy crude into exportable grades. The company is also assessing three additional areas in the Orinoco that include developed and undeveloped fields, the four people said, declining to be named because the agreement details are confidential.
Exxon also is negotiating exploration rights at a separate block, two of the sources said.
At two projects involved in the present talks — Petromonagas and Petrovictoria — Russia’s participation remains an open question.
Russian state oil firm Rosneft acquired a 40% stake in Petromonagas following its expropriation from Exxon. The stake was transferred in 2020 to Roszarubezhneft, a Russian state firm created to shield Moscow’s overseas assets from US sanctions.
Russia’s government has said publicly the company remains a stakeholder in those two and other oil and gas projects in the OPEC country. Venezuela’s oil minister Paula Henao said this year that the government fully respected its agreements with Russia and China and that joint ventures in which they hold stakes would continue to operate.
Exxon has not publicly disclosed its areas of interest in Venezuela and has not made any reference to Russia’s stakes.
BIG SCORE
A return by Exxon to Venezuela, decades after its assets in the country were nationalized by the government of former President Hugo Chavez, could be a big win for US President Donald Trump, who has pushed to remake the South American nation’s energy sector.
“This memorandum is a meaningful first step, but any future investment would require stable policies, clear regulations, strong investment protections and competitive returns,” Exxon said in a statement on Monday.
In January, shortly after US forces removed then-President Nicolas Maduro from power, Exxon CEO Darren Woods called Venezuela “uninvestable” during a meeting at the White House and said much more work needed to be done to protect long-term investments and prevent potential future expropriations.
Following an oil reform pushed by Rodriguez earlier this year that has allowed newcomers into the country’s energy sector, Woods’ comments have softened. He said during the company’s third-quarter earnings call that progress had been made to improve fiscal and legal terms.
US Energy Secretary Chris Wright said this week on social media that Exxon’s preliminary agreement was a “tremendous progress in a remarkable short time.”
(Reporting by Marianna Parraga and Sheila Dang in Houston, and Deisy Buitrago in Caracas; Editing by Nathan Crooks)
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