ExxonMobil CEO Darren Woods said with extraordinary bluntness at a White House gathering of oil executives Friday that the company would not be diving headfirst into Venezuela, saying the current situation on the ground presents an unacceptable risk to the company.
“If we look at the legal and commercial constructs and frameworks in place today, in Venezuela today, it’s uninvestible, and so significant changes have to be made to those commercial frameworks, the legal system,” Woods said. “There has to be durable investment protections, and there has to be a change to the hydrocarbon laws in the country.”
Exxon left Venezuela in 2007 when the Chavez regime nationalized the oil industry. Exxon wouldn’t accept the country’s terms, and the government seized the company’s assets there.
To return in full and restore Venezuela’s dilapidated oil infrastructure, Woods suggested Exxon would need to be convinced that the country had a stable political system, protections from crime and theft, and changes to Venezuela’s laws that require foreign companies to enter majority-government-run joint ventures and taxes of 60% on oil proceeds.
Woods said he was confident the Trump administration could make those necessary changes. But to even understand what kind of return on investment Exxon would get from Venezuela, Woods said a number of questions need to be answered first.
“The questions will ultimately be: How durable are the protections from a financial standpoint? What are the returns look like? What are the commercial arrangements, the legal frameworks?” Woods asked. “All those things have to be put in place in order to make a decision, to understand what your return would be over the next several decades that these billions of dollars of investments would be made on.”
Pressed by President Donald Trump on a timetable for a return, Woods said the company could return with a scout team to assess the situation and make determinations about what would be required for a larger comeback.
“We can we can hit the ground and within the next couple of weeks, start the assessment, and then from there, we need to understand what’s needed,” Woods said.