ExxonMobil in Advanced Talks for Venezuela Return, Eyeing Former Orinoco Project

ExxonMobil is in advanced negotiations to re-enter Venezuela's prolific Orinoco Belt, targeting a major heavy oil project it was forced to abandon nearly two decades ago, according to people familiar with the matter. A finalized deal would mark a significant strategic reversal for the U.S. energy giant, which has largely remained on the sidelines as competitors move to secure positions in the OPEC nation.

Negotiations Focus on Former Assets

The talks are centered on the Petromonagas heavy oil project, formerly known as Cerro Negro, in which Exxon held a 41.67% interest before its assets were nationalized in 2007 by the government of then-President Hugo Chavez. Sources indicate Exxon has also shown interest in areas within the neighboring Carabobo block.

The company has dispatched technical teams to evaluate Venezuelan oilfields this year, a notable shift from CEO Darren Woods' previous characterization of the country as "uninvestable." Company executives have suggested that Exxon's extensive experience with heavy oil extraction at its Canadian projects gives it a unique advantage in developing Venezuela's vast reserves.

Geopolitical and Competitive Landscape

Exxon's potential return comes as other international energy firms secure deals in Venezuela, encouraged by the U.S. administration. Recent activity includes:

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• Italy’s Eni and U.S.-based Chevron finalizing agreements to expand their projects.
• Continental Resources signing a memorandum of understanding with state oil company PDVSA for the Ayacucho 2 area.

A significant complication for any Exxon deal is the ownership structure of Petromonagas. A 40% stake in the project is held by Roszarubezhneft, a Russian state-owned firm that acquired the interest from Rosneft in 2020. It remains unclear how this Russian ownership would be reconciled in an agreement, particularly as the U.S. government has expressed a desire to limit the influence of its adversaries in the region.

Operational Hurdles and Peer Approaches

While the Petromonagas upgrader—a critical facility for processing extra-heavy crude into exportable grades—is operational, it is expected to require major repairs and investment after years of sanctions and underfunding, according to PDVSA documents and sources. This presents a considerable capital expenditure challenge for any incoming partner.

In contrast to Exxon's engagement, rival U.S. major ConocoPhillips is refusing to negotiate a return until it secures payment of an $11 billion arbitration award owed by Venezuela and PDVSA for the 2007 expropriation of its own projects. This highlights the varying strategies and risk appetites among U.S. firms considering a return to the world's largest proven oil reserves.