Chevron shares surged on premarket Monday following the unexpected removal of Venezuelan President Nicolas Maduro at the weekend. This fueled optimism that US companies would be able to gain greater access to Venezuela’s huge crude oil reserves.
Investors expect a new government to ease the longstanding constraints of operations in the oil-rich nation.
ConocoPhillips rose sharply as well, rising by nearly 9% at $105.02 on speculation that US producers might eventually return.
This rally was held in response to the dramatic military action that took place early on Saturday morning, ending Maduro’s reign. President Donald Trump claimed this would allow American energy companies back into Venezuela following years of tension with Washington.
At a Mar-a-Lago press conference, Trump stated that the removal of Maduro will allow US firms to rebuild Venezuela’s damaged oil infrastructure and generate profits for the nation.
He said, “Our very large United States Oil Companies, which are the largest in the entire world, will spend billions to fix badly damaged infrastructure and the oil infrastructure. We’ll start earning money for our country.”
This could mark a turning point for the global energy industry.
In Iraq, the last major opening was six years ago. The auctions of oilfields drew bids in excess of one billion dollars.
Chevron is the only US company to be ranked among major US companies
Chevron, the largest US oil company in Venezuela is also the sole major US oil firm currently operating there.
JP Morgan analysts said that an ease in restrictions could enable Chevron’s expansion and increase Venezuelan oil production. This has been crippled for years by mismanagement and lack of investment.
Chevron operates under joint ventures, with a license issued by the Trump Administration.
According to estimates from the industry, Venezuela produces around 900,000.00 barrels per day. Chevron is responsible for about one third of this output.
The production had plummeted to 665,000 barrels a day by 2021. This was down from the 1970 peak of 3.7 millions barrels a day, and then began a modest rebound in 2024.
Francisco Monaldi is the director of Rice University’s Baker Institute’s Latin America Energy Program in Houston. He believes that Chevron will be best placed to profit immediately from an opening.
He said that other US oil firms would also be watching developments carefully before investing capital.
Monaldi stated that Conoco is likely to be the company most interested in returning, as they owe more than $10 Billion and are unlikely to get paid without coming back.
He added that Exxon Mobil may also be able to return even though they owe less money than ConocoPhillips.
Monaldi, in a Reuters article, said that “Exxon Conoco, and Chevron aren’t going to worry about investing in heavier oil because it is very needed in the United States, and they don’t have as much focus on decarbonization.”
He added that European firms may be less willing to invest in Orinoco Belt because of its high returns.
Military action blindsides industry
The Financial Times reports that despite Trump’s public encouragements, US oil giants are cautious about calls to invest again.
Venezuela’s long history of expropriations and political instability, as well as the huge sums needed to restore production are all causes for concern.
According to a Financial Times report, an industry insider said that Exxon Mobil executives and those at Chevron, ConocoPhillips and ConocoPhillips had been blindsided by US military actions that resulted in Maduro being removed.
The insider stated that “none of the players in the Venezuelan industry who have capital or expertise and are willing to invest there were consulted or advised prior to the ouster of Maduro, or before the President made his remarks.”
Chevron stated in a Saturday statement that it was focusing on its workers’ safety and integrity in the country.
Around 3,000 Venezuelans are employed by the company, its joint ventures and other companies.
Despite the political changes, there are still significant obstacles to overcome
Western energy companies have been drawn by Venezuela’s abundance of resources and low cost. However, analysts believe that any significant increase in investment depends on the political stability as well as credible assurances about contract enforcement.
Venezuela is also owed billions in joint venture costs, arbitration awards and unpaid fees by Exxon Mobil ConocoPhillips, and Chevron.
Many people believe that settling these obligations is a pre-requisite for reinvesting large amounts of money.
It would still take many years to develop new oil and natural gas projects, even if all political, legal, and financial barriers were removed.
Rapidan Energy believes that Venezuelan oil production may increase by as much as 200,000 barrels a day the year following Maduro’s removal. It could even reach 2,000,000 barrels a day within 10 years under their most optimistic scenario.
Economic rebuilding requires a broader approach
Jose Ignacio Hernandez is a professor of law and a consultant with Aurora Macro Strategies. He said that oil companies are still interested in Venezuelan reserves, but they will not return without wider reforms.
He said that oil companies are always looking for more and Venezuela is a good source of this.
But they also need political stability. This requires more than simply removing Maduro. “The situation continues.”
Orlando Ochoa is a Caracas based economist who was a visiting fellow of the Oxford Institute for Energy Studies. He described the magnitude of the challenges facing a new government.
Infrastructure has deteriorated and tens of thousands trained energy professionals left the country.
Ochoa, in comments published by The Wall Street Journal said that Venezuela needed a comprehensive plan for economic stabilisation, amendments to the local laws, to limit the overreach of the state, a restructuring of debt worth $160 billion, and the settlement outstanding arbitration cases, to attract foreign investments.
Ochoa stated that the US should implement something like a Marshall Plan. This is more than just entering the oil and natural gas industry to simply extract crude.
The post Chevron’s shares soar as Maduro falls puts US oil giant in pole position to take Venezuelan oil first appeared on ICD
