U.S. President Donald Trump is extending an unprecedented opportunity to American energy companies to tap into Venezuela’s vast, yet dilapidated, oil sector. Following the U.S.-backed removal of Venezuelan President Nicolás Maduro over the weekend, Trump administration officials plan to meet with executives from ExxonMobil, Chevron, and ConocoPhillips later this week to explore strategies for boosting Venezuelan oil production, according to Reuters.
Venezuela holds the world’s largest proven oil reserves, exceeding 300 billion barrels roughly one-fifth of global supply. Despite this potential, years of mismanagement and U.S. sanctions have caused production to plummet from over 3.5 million barrels per day (bpd) in the 1970s to below 1 million bpd last year, representing less than 1% of today’s global output.
Such opportunities are rare, comparable only to Western oil firms’ rush to acquire assets in post-Soviet states during the early 1990s or in Iraq following Saddam Hussein’s fall. Yet, despite the scale of potential production gains, significant challenges remain.
Below-Ground Challenges
Most of Venezuela’s reserves are heavy or extra-heavy crude, located in the Orinoco belt. These grades are highly viscous, requiring blending with diluents and intensive upgrading before extraction, transport, and refining. The process increases both production costs and the carbon footprint, potentially further elevating costs if emissions regulations or taxes rise.
Consultancy Wood Mackenzie estimates breakeven costs in the Orinoco belt average over $80 per barrel, placing Venezuelan oil among the most expensive new production globally. By comparison, heavy oil from Canada costs around $55 per barrel. For context, ExxonMobil aims for a global breakeven of $30 per barrel by 2030, leveraging low-cost fields in Guyana and the U.S. Permian Basin. Chevron and ConocoPhillips maintain similar cost targets.
Given these economics, convincing U.S. majors to invest billions into Venezuela’s high-cost oil may be a hard sell. “The opportunity must be compelling enough to offset the substantial political risk that will persist in the years ahead,” says Carlos Bellorin, analyst at Welligence Energy. Even with favorable policy changes, cost reductions, and incentives, the political uncertainty remains a significant barrier.
Above-Ground Risks
Oil companies routinely navigate political instability in regions such as Libya, Iraq, and Angola. Yet Venezuela’s current situation marked by an unpredictable leadership transition and weak institutional trust presents exceptional risks. Until a stable, investor-friendly government emerges, multinational companies may hesitate to commit capital or sign long-term contracts.
U.S. oil firms are also cautious about the optics of aligning too closely with American foreign policy. Trump claimed on Sunday that he had consulted with major energy companies regarding Venezuela “before and after” Maduro’s removal, a statement refuted by company executives. While the firms are likely to signal interest in exploring opportunities, they may stop short of committing significant resources until legal and operational assurances are in place.
The Bottom Line
Venezuela offers a tantalizing prize for energy majors: enormous reserves, untapped production potential, and the chance to reshape the regional energy landscape. Yet the combination of high production costs, political instability, and historical corruption makes the proposition extremely risky.
For U.S. oil companies, the question is whether the potential rewards outweigh both the financial and reputational risks. While preliminary discussions with the Trump administration are expected, any large-scale investment in Venezuela will require careful navigation of both below-ground technical challenges and above-ground political realities.
