ExxonMobil may return to Venezuela almost 20 years after its assets were expropriated

A memorandum with no legal force

Venezuela's state oil company PDVSA has signed a memorandum of understanding with the American company ExxonMobil, Reuters reports, citing the corporation's press service (as reported by Gazeta.Ru). The document has no legal force and does not oblige ExxonMobil to participate in projects, but it is seen as a first step toward a concrete agreement. The agreement could provide for the creation of a joint venture for oil exploration and production, or a production-sharing agreement.

Caracas's position and historical context

Venezuela's authorized official Delcy Rodríguez welcomed the signing of the memorandum and stated her readiness to create favorable conditions for American investment, ensuring legal certainty to protect the company's operations. If a deal is concluded, ExxonMobil will return to Venezuela almost 20 years after its assets were expropriated: in 2007, under President Hugo Chávez, the authorities stripped ExxonMobil and ConocoPhillips of their controlling stakes in joint ventures, and that conflict became one of the grounds for the United States imposing sanctions on Venezuela.

Connection to the August agreement

The memorandum builds on a broader arrangement: on August 28, Caracas and Washington announced an energy agreement, envisaging the development of 17 key fields with a total potential of 65 billion barrels of oil and investments of over $100 billion. Delcy Rodríguez said at the time that the agreement would make it possible to significantly increase production by bringing in private operators while maintaining state ownership of oil resources. Thus, the signing of the memorandum with ExxonMobil remains, for now, merely a declaration of intent rather than a decision to bring the company back: a concrete agreement has yet to be concluded, and its format (a joint venture or production sharing) has not been determined.