ExxonMobil has signed a preliminary deal with Venezuela interim government to explore local drilling opportunities, months after the oil major called the country uninvestable. The deal, reported on Tuesday, is the first sign that a big Western oil company is willing to test the waters in a post Maduro Venezuela, and the caution is visible in every detail.
Why it matters
The clearest signal is the length of the announcement. ExxonMobil press release was only 38 words long, a hint at how cautious the firm remains in a country where the politics are still unsettled. A company that means to invest billions does not usually whisper, and the brevity says the deal is a toe in the water, not a commitment.
The politics explain the caution. Opposition figure and Nobel laureate Maria Corina Machado is back in the country and calling for elections, and the interim government authority is untested. An oil major that moves too fast risks its assets, its reputation and its shareholders, and ExxonMobil has been burned in Venezuela before, when its operations were seized. Venezuela oil industry was once among the biggest in the world, and its collapse is one of the great economic disasters of the century, driven by mismanagement, corruption and sanctions.
What happens next
The prize is large enough to justify the risk. Venezuela holds some of the biggest oil reserves in the world, and its production has collapsed after years of mismanagement and sanctions. The interim government authority is untested, and the opposition figure calling for elections is Maria Corina Machado, a Nobel laureate whose return to the country has raised hopes of a democratic transition. If the country stabilises, the first companies back will have their pick of the fields, and the early movers will set the terms for everyone who follows.
What happens next will be decided by whether the interim government can hold and whether elections follow. For now, the 38 word release is the whole story: a giant is interested, but not yet committed, and the next announcement will say more than this one did.
