“Wildcatter” oil entrepreneurs are racing to secure deals in Venezuela, as they seek to get ahead of energy majors that are still weighing the risks of re-entering the country after the US capture of Nicolás Maduro.
Many have experience of working in Venezuela, while some have previously struck deals in the country, which may enable them to resume operations more speedily if the US lifts sanctions and they can secure funding.
Venezuelan-born José Francisco Arata, the chief executive of Canada’s New Stratus Energy who worked in the country’s oil industry in the 1980s and 1990s and is now based in Colombia, said his company had been following the situation in Caracas for months. It has rights to operate in four fields in the east of Venezuela if the US lifts sanctions.
“I can tell you that since 2am on January 2, my phone has been ringing nonstop,” he told the Financial Times. “We have been there, we have the experience, we know how to operate locally because we are Venezuelan and we have a group of investors who are willing to get back in with the investment required.”
Ali Moshiri, Chevron’s former head of Latin America, told the Financial Times this week his Amos Global Energy Management fund was seeking to raise $2bn to invest in the South American nation.
The US imposed tough sanctions against the Maduro regime during the first Trump administration under a “maximum pressure” campaign, which curtailed foreign operators’ activity in the country’s oil industry.
Washington last year tightened sanctions, stripping licences to pump and export Venezuelan oil from Chevron, Spain’s Repsol, Italy’s Eni and Global Oil Terminals, a company controlled by Harry Sargeant III, a Florida magnate with ties to the Republican Party.
Chevron’s licence was restored a few months later but Repsol, Eni and Sargeant are continuing to lobby the Trump administration to be able to resume operations and potentially expand their operations.
Sargeant said smaller operators would play a critical role in stabilising Venezuela and its economy before the US majors were willing to invest.
“I don’t see Venezuela being an option for the majors in the short term. They have shareholders to answer to, issues with ESG, and a path to transition to democracy and rule of law before they commit. That is why they have to use the independents and the wildcatters that can go in there and quickly stabilise, start the recovery and get things moving again.”
“First movers with a higher risk tolerance are likely to capture the greatest upside,” Carlos Bellorin, an analyst at energy consultancy Welligence, said in a note. He added that “smaller US independents are best positioned to play that role. The rationale is straightforward: securing one or two world-class Venezuelan assets could be genuinely transformational — company-making opportunities that are increasingly scarce elsewhere.”
Executives from some of the world’s largest oil companies will meet President Donald Trump on Friday at the White House to discuss investment opportunities. But many are concerned about the financial, political and legal risks of investing billions of dollars given the uncertain political environment in Venezuela.
Analysts say this could give smaller, more nimble companies an opportunity.
Some political risk consultancies, including Signum Global Advisers, are arranging business trips to Caracas for US investors to meet local partners and political contacts. However, legal, financial and logistical hurdles remain before any of these smaller operators are likely to be able to start operations, analysts say.
One energy entrepreneur looking to enter Venezuela, who asked not to be named because they did not yet have a licence from the US Treasury to do so, said they had scouted locations and had a “real, on-the-ground, understanding”.
“It is a once-in-a-lifetime opportunity” to acquire rights to producing fields, they added.
However, they said they needed banks to start offering finance in order to take advantage. “For companies like ourselves, who are not the size of a US major and who have to pay upfront, we need credit — and there is no credit, not only for the oil and gas sector, but for any sector.”
They also called on the US government to start issuing licences to allow US companies to begin the process of negotiating with PDVSA, Venezuela’s state oil company. “They need to allow US citizens to talk to PDVSA about all businesses, financing, oil trading, anything,” they said.
Elisabeth Eljuri, an oil and gas expert who has worked on several Latin American energy reform projects, said it would take time for larger companies to assess the situation in Venezuela, opening up a window for smaller players with a greater appetite for risk. But she added that these investors would ultimately only be able to operate smaller oilfields that require less capital investment.
“Anything in the Orinoco belt, and the extra heavy oil that Venezuela has, requires technology and a level of capital expenditure that smaller players cannot make,” she said.
Eljuri added that she was also unsure how easy it would be for entrepreneurs to sell assets to larger companies at a later stage. “If I am a company, do I buy into a project that does not have a solid contract and solid legal foundation?” she asked.
Evanan Romero, a former PDVSA board member who is advising the US oil industry on its re-entry into Venezuela, played down the prospects for individual entrepreneurs.
“What Mr Trump wants, and I support him completely, is big corporations,” he said. “We need people with deep pockets, and knowhow and technology that can mobilise fabricators and engineers.”
But smaller players, including Moshiri, the former Chevron executive who runs Amos Global Energy Management, say they are confident they will be able to access the Venezuelan market and make a difference.
“Private capital is going to be the first to go in there and take the risk,” he said, adding that “there is such huge potential”.