by WILL COOPER
Special contributor
NEW YORK, (CAJ News) – WITH Venezuela long recognised as home to the largest proven oil reserves in the world, it might seem like an obvious target for foreign investment.
But recent developments illustrate why major the United States energy firms have hesitated to commit billions to revive the country’s oil industry despite political shifts in Caracas.
Following the ouster of Venezuelan President Nicolás Maduro in a high-stakes U.S. intervention, President Donald Trump has publicly called on American oil companies to invest in rebuilding Venezuela’s dilapidated petroleum sector.
At a January White House meeting, Trump urged executives from ExxonMobil, Chevron, ConocoPhillips and others to commit up to $100 billion to modernise the industry, offering what he described as “total safety” and protection from political risk.
He stressed that firms would be dealing with the United States rather than directly with Venezuela.
“You have total safety,” Trump told attending executives, adding that the proposed investments would come from the companies’ own capital, not federal spending.
Yet even as Trump pushed for swift investment, the response from industry has been cautious at best.
ExxonMobil CEO Darren Woods was quoted directly to the president that, in its current condition, Venezuela’s oil sector is “uninvestable” without significant reforms to legal frameworks, investment protections, and commercial laws.
Other executives have echoed that sentiment, expressing hesitation to commit until clarity exists on political stability, property rights and the long-term business environment.
Despite its huge reserves, Venezuela’s oil industry faces a litany of structural challenges that make it difficult to tap:
Aging, underfunded infrastructure, decades of underinvestment, mismanagement, corruption, and the effects of international sanctions have left pipelines, refineries and storage facilities in poor repair.
Restoring them will require massive capital, specialised equipment, and sustained maintenance over years or even decades.
The U.S sanctions on Venezuela have led many international firms to avoid engagement with the state oil company PDVSA.
Sanctions also restrict access to financing, technology and essential services, all of which are necessary for large-scale development.
Venezuela’s oil tends to be heavier and more sulphur-rich than many alternatives, requiring more energy and specialised refineries to process profitably—something many global players are reluctant to tackle while other easier, cheaper sources exist.
Frequent changes in government, legal uncertainty over contracts, and ongoing domestic political tensions make long-term planning difficult.
Energy analysts warn that political risk can alter the value of long-term investments overnight.
These factors help explain why, even as Venezuela holds enormous potential on paper, oil production has declined from peaks above 3 million barrels per day in past decades to under one million today.
At the White House meeting, Trump emphasised that U.S. oil firms would not be operating under the Venezuelan government alone and suggested that American backing would mitigate security concerns and assure legal protections.
“You’re dealing with us directly and not dealing with Venezuela,” he told executives, while also indicating that profits and safety would be backed by collaboration with U.S. and Venezuelan authorities.
Despite this, senior executives made clear they need substantial reforms before committing major capital.
ExxonMobil’s CEO noted the need for durable legal guarantees, and other firms have signalled that returning to an environment that previously saw assets expropriated requires cautious negotiation.
Beyond economic headwinds, there are significant geopolitical risks.
A segment of the Venezuelan population and military remains loyal to Maduro’s ideology, and some analysts warn that any perception of U.S. domination over national resources could fuel anti-American sentiment and potential acts of revenge against foreign workers or infrastructure.
The possibility of sabotage or targeted attacks — particularly in rural or contested regions — could elevate costs and endanger personnel.
Continued unrest, militia activity, and unresolved internal disputes further complicate the investment landscape.
Critics also argue that external interference and resource competition can inflame nationalist resentments, potentially making U.S. energy firms symbolic targets in broader geopolitical grievances.
Analysts stress that stability and genuine local buy-in are essential before large-scale foreign capital can safely operate.
Analysts warn that without a peace dividend and inclusive governance; foreign companies face security liabilities on top of economic ones.
While Trump’s administration publicly frames Venezuelan oil as a strategic resource driving both U.S. energy security and economic interests, the realities on the ground are far more complex.
Oil companies remain wary, many citing the need for political certainty, legal safeguards, and economic reform before making irreversible commitments. Until these conditions are met, Venezuela’s oil may remain rich in reserves but challenging to access safely and profitably.
– CAJ News