Oil executives are anxious about Venezuela

Big Oil companies historically serve as geopolitical risk assessors. This skill is about to be put to the ultimate test. Oil exploration requires substantial investments, and navigating political risks is just as crucial as the engineering challenges. Patrick Pouyanné, CEO of TotalEnergies, acknowledges that his firm is not overly risk-averse, yet he remains hesitant to invest in Venezuela due to its uncertain political landscape.

While major oil corporations have maintained steady growth, they are now feeling pressured to take on more risks due to geopolitical shifts. Vincent Piazza, a senior energy analyst at Bloomberg Intelligence, explains that the true concern is not technical or geological, but rather political. The recent events in Caracas suggest that oil executives are still leery of political risks.

Despite the celebratory atmosphere in the city, fuelled by US Energy Secretary Chris Wright's visit and a new deal for the Pentagon to take partial ownership of a major oil reserve, there is significant apprehension about the Trump administration's involvement. Oil executives are unclear about the US government's role and whether it will open new opportunities or remain exclusive to Venezuelan oil magnate Alejandro Betancourt López.

This caution is justified, as the consequences of misjudging can be catastrophic, resulting in billions of dollars in losses. Both Washington and Caracas must foster a more stable environment before more companies can venture into Venezuela's oil industry. Piazza advises a cautious approach, considering the brief tenure of the current administration.