On November 9 in Caracas, ExxonMobil signed a memorandum of understanding with PDVSA, paving the way for a return to Venezuela nearly 20 years after its assets were expropriated in 2007. The non-binding agreement gives Exxon Mobil an exclusive one-year opportunity to negotiate contract terms and study geological data after months of discussions. According to the published information, the company will be able to evaluate seven blocks, including Petromonagas (formerly Cerro Negro), as well as three additional blocks in the Orinoco area and one exploration block.
The move is a clear shift from his position expressed in January, when CEO Darren Woods described Venezuela as an unattractive investment destination. It's not the geology that has changed, but the terms of the contract: ExxonMobil said any renewed investment is contingent on stable policy, clear regulation and a competitive economy, and Woods reported in the third quarter that some progress had been made on tax and regulatory issues. For Caracas, bringing in a large company with heavy oil experience is a way to revive existing fields and explore the possibility of a wider normalization of relations with US support, although Russian and Chinese interests remain a constraint as Rosarovezneft still owns 40% of Petromonas.
The strategic message is that Venezuela is once again included in the long-term production planning, but only if the terms of the contract are respected and operations are coordinated with partners.