U.S. officials told oil executives on Wednesday that Washington will not provide security guarantees for companies operating in Venezuela, even as the Trump administration encourages the industry to re-engage with the country’s oil sector.
According to people familiar with the discussions, senior administration officials said companies would be expected to manage their own physical and political risk if they choose to invest, signaling limits to U.S. involvement as Venezuelan crude re-enters global markets.
“We are not going to get involved in providing on the ground security for people in Venezuela,” U.S. Energy Secretary Chris Wright said during an interview with Bloomberg Television. “Oil and gas companies operate all around the world in all different settings, they’re well versed in those challenges.”
Years of expropriations, contract rewrites, payment arrears, and operational breakdowns have made boards reluctant to deploy long-cycle capital without firm legal and security assurances. U.S. oil companies have privately warned that without enforceable contracts, clearer fiscal terms, and some form of risk backstop, investment will remain limited, capping how quickly Venezuelan output can recover even under a more permissive U.S. policy framework.
Earlier this month, American Petroleum Institute (API) President and CEO Mike Sommers publicly said that policy changes, security, and investment protections were among the prerequisites the industry wants in place before investing significantly in Venezuela’s oil sector.
In the near term, Venezuelan barrels are returning to the market not through upstream investment but through discounted trade flows. U.S. refiners including Valero and Phillips 66 have snapped up Venezuelan crude via trader Vitol, with cargoes priced roughly $8.50 to $9.50 per barrel below Brent. For Gulf Coast refiners configured to run heavy sour grades, the economics are attractive.
Before sanctions in 2019, the region processed hundreds of thousands of barrels per day of Venezuelan crude, and refiners have been eager to partially replace heavier imports lost elsewhere.
By Charles Kennedy for Oilprice.com
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