At a downtown Houston bar, Matthew Goitia, director of Pelorus Terminals, outlines his initial idea to renovate and build marine terminals capable of blending and exporting crude oil and shipping chemicals to Venezuela. The ambitious plan, which it estimates could cost between $250 million and $1 billion, involves renovating an existing marine crude terminal in Venezuela, building a new one and then converting the older facility to transfer chemicals and other materials. It is also considering adding storage tanks, overhauling piers and will need to secure electricity supplies, a set of works that could take between three and 10 years.
There’s still a lot to figure out, and it’s unclear how to get the US government’s permission to do all of this. Any initiative in the country will probably also need the support of local authorities and the state oil company PDVSA, but this does not prevent the first ideas from emerging.
In offices scattered around the city, the heart of the US oil industry, executives, entrepreneurs and opportunists are looking for a way to grab a slice of the work to exploit Venezuela’s enormous crude oil reserves, considered the largest in the world.
“The little ones are willing to take risks, Venezuela is the lost world,” says Goitia. It has already held talks with two private equity investors and is arranging meetings with like-minded wildcatters, i.e. independent drillers risking equity to drill unproven wells, exploring ways to enter the South American country.
Less than a month after the US incursion into Caracas to capture Venezuelan President Nicolas Maduro, the prospect of a new oil rush galvanises Houston’s industry as US President Donald Trump targets $100 billion in investment to rebuild the country’s crumbling oil sector.
This enthusiasm is also felt among much larger companies. Jeff Miller, CEO of Houston-based oilfield services giant Halliburton, told analysts during an earnings call on Wednesday that his phone “doesn’t stop ringing” with inquiries about Venezuela. The company had left Venezuela in 2020 following US sanctions, but is now working to obtain the licenses needed to return, he said.
Miller attended a White House meeting in January and told Trump that Halliburton is “very interested” in returning and that he himself has lived in Venezuela for four years, partly raising his children there. He told investors this week that “there are opportunities for us sooner rather than later.”
“There’s a lot of initial enthusiasm: Everyone wants to move,” says Francisco Monaldi, director of the Latin America Energy Program at the Baker Institute at Rice University in Houston.
Monaldi reported that the Energy Department has held meetings with wildcatters, including Harold Hamm, founder of Continental Resources, and Jeff Hildebrand, founder of Hilcorp Energy. These oil billionaires also attended the roundtable on Venezuela with Trump at the White House on January 9. Continental and Hilcorp did not immediately respond to email inquiries about the status of any talks or proposals.
MEETINGS ALSO IN NEW YORK AND DENVER
Ali Moshiri, Chevron’s former head of Africa and Latin America and now CEO of Houston-based Amos Global Energy, has been preparing to enter Venezuela for years and has entered into preliminary talks to raise up to $2 billion. He told Reuters he had recently had meetings with potential investors in Houston and New York.
Enthusiasm for rapid entry has been curbed by the fact that no one yet knows the rules for investing and operating in Venezuela under US supervision. Some companies want to see more concrete plans from the United States for a future transition to democracy in Venezuela that would ensure a more stable political environment for their long-term investments.
“There are two groups of companies. Some are cautious and waiting for reforms, and even a risk-free scenario to go there, while others are behaving as if it is a new ‘gold rush’,” says Moshiri. “Those who have already been dealing with Venezuela for a long time are looking for a middle ground.”
JP Hanson, global head of investment bank Houlihan Lokey’s oil and gas group, said there are many conversations about Venezuela, but public and private investors still face considerable uncertainty.
“They will need a clear opportunity to own assets, know what they are investing in and know they can protect them,” he said on the sidelines of an industry event in Houston on Thursday.
Venezuela’s National Assembly began discussing a radical reform of hydrocarbon law last week that would allow foreign and local companies to independently manage oil fields through a new contractual model. The changes, awaiting approval, could be a first step in allowing wildcatters and independents to enter the country with updated contracts and greater flexibility than the current joint venture model.
THE DENVER CONNECTION
Denver, Colorado, meanwhile, is emerging as another hub of Venezuela-related activity after several companies based there participated in the roundtable with Trump. These include Raisa Energy, which acquires non-operating stakes in energy assets and is led by a Venezuelan CEO; Tallgrass Energy, a midstream company with pipeline and terminal assets, and Aspect Holdings.
American oil companies could help restore Venezuelan production and prosperity and are ready to begin “real work, quickly,” said Alex Cranberg, president of Aspect.
“The premium is huge, but you need durable contracts and long-term trust,” he added in an email response to Reuters, referring to the development potential of the prolific Orinoco Belt, rich in heavy crude. He also highlighted the potential for both onshore and offshore wildcat exploration, as modern technology could unlock oil and gas resources not yet reflected in current reserve estimates.
“We need realistic and reliable contractual and security agreements. We need technical data and lots of it,” Cranberg continued.
Trump told executives they would be “dealing directly with us” and not Venezuela, but it is unclear which US agencies would do what, who would handle licensing and approve deals, or when sanctions banning them from facilitating Venezuelan oil trade might be lifted.
Any American company wanting to work in Venezuela’s oil sector currently needs a license or sanctions waiver from the US Treasury Department, and international banks also cannot operate there under the current sanctions. Many Venezuelan laws would also need to be changed before companies can invest, some lawyers said.
PRESSURE FROM WASHINGTON TO ACCELERATE
Trump and his Energy Secretary Chris Wright, meanwhile, want the industry to get moving.
“They’re in a hurry, because the president told Wright to hurry, and Wright naturally tries to deliver results,” Monaldi explains. Realistically, however, the fastest gains in Venezuelan oil production would likely come from operations run by American oil giant Chevron, the only U.S. producer licensed to operate there.
There is also excitement in the PDVSA offices in Caracas and in operational sites around the country, according to company sources who requested anonymity. The climate has changed rapidly since the company said it was making progress in negotiations with the US. Some executives are racing to arrange meetings with foreign managers on production, exports, electricity supply and business opportunities, the sources said.
There has been a boom in interest from companies studying potential opportunities in Venezuela, says Emil Calles Lossada, chief executive of Venezuelan Venergy Global, which gathers business intelligence for companies interested in investing. However, current sanctions hold back most of them, so there is a need to ease restrictions and implement legal reforms in the South American country, he adds.
Back in Houston, Goitia estimates returns of at least 20% when the two systems are fully operational. He sees significant potential for higher returns if a large company is interested in buying them after a few years.
In a nearby office, meanwhile, an aspiring energy developer seeking investors presented a different proposal: $70 million a year to revitalize abandoned oil wells in eastern Venezuela. He believes he can turn the investment into an $800 million profit.
He’s trying to raise the money among Texas wildcatters and wants to get existing wells that need an overhaul back online. The infrastructure, even if degraded, should be sufficient and he says it adds up. All it takes is to get to 50,000 barrels a day, which could take about seven months.
Texan dreams are big and Venezuela is once again as hot as the legendary El Dorado.
(Reporting by Arathy Somasekhar and Nathan Crooks in Houston, with additional contributions by Liz Hampton and Marianna Parraga; Editing by Simon Webb and Anna Driver)
