Exxon's Guyana operations not imperiled by Venezuela

November 12, 20261 min read

Dear Editor,

Perhaps we could get a statement from ExxonMobil why the company shifted from labeling Venezuela “uninvestable” to signing a non-binding Memorandum of Understanding (MoU) with state oil company PDVSA. The current understanding is their shift in strategy was driven by structural changes in Venezuela’s regulatory landscape, geopolitical pressure, and strategic commercial considerations.

When CEO Darren Woods initially called Venezuela “uninvestable,” he pointed to historical asset expropriations, strict foreign ownership caps, and a lack of durable legal protections. Venezuela addressed these core concerns by rewriting its Hydrocarbons Law, cutting PDVSA’s mandatory majority stake requirement in joint ventures, capping state royalties, and creating production participation structures designed to protect foreign capital while offering legal certainty.^[1]

The shift was also facilitated by evolving Washington foreign policy and targeted sanction relief, where the U.S. government encouraged American majors to aid in rebuilding Venezuela’s energy infrastructure through specialized U.S. Treasury (OFAC) licences.^[2]

Beyond regulatory alignment, commercial and operational synergies played a major role. Exxon operates massive offshore production in neighbouring Guyana, making diplomatic and commercial alignment in the region vital for managing territorial and political friction.

Operationally, Exxon’s longstanding expertise processing Canadian oil sands gives it a distinct technological edge in extracting and refining extra-heavy crude from Venezuela’s Orinoco Belt.

I believe exploring a return to Venezuela does not imperil Exxon’s flagship Guyana operations because the two ventures are legally, geographically, and strategically decoupled. Guyana’s ultradeep-water Stabroek block is governed by clear production-sharing agreements backed by international law, whereas any potential investments in Venezuela remain strictly preliminary and firewalled under separate legal structures. Furthermore, establishing a working commercial dialogue with Caracas serves to lower regional security friction in the Essequibo border zone, protecting Exxon’s offshore infrastructure from geopolitical escalation while diversifying its South American asset portfolio.

With competitors expanding their footprint under the revised laws, Exxon signed the preliminary MoU to preserve its option to negotiate access to the world’s largest proven crude reserves. However, the agreement remains strictly exploratory, and Exxon executives maintain a cautious stance, stating that binding capital commitments will depend on final contracts securing robust, permanent legal safeguards.

Sincerely,
Keith Bernard

References

Venezuela Reforms Hydrocarbons Law: A Potential Sea Change for Foreign Investment in the Oil Sector? | King & Spalding

www.kslaw.com, Feb 19, 2026

Under the LOH Reform, upstream hydrocarbon activities (exploration, production, and initial transportation and storage of oil and associated gas) may be conducted by: (i) the National Executive, Venezuelan wholly state-owned entities, including Petróleos de Venezuela, S.A. (“PDVSA”), or their affiliates; (ii) joint venture companies (empresas mixtas) in which the Republic or a state entity directly or indirectly holds an ownership interest greater than 50% providing them shareholder control; and (iii) private companies domiciled in Venezuela, acting under contractual arrangements with state-owned companies or their affiliates. The initial draft bill waived the explicit requirement for state ownership exceeding fifty percent in joint ventures, which introduced flexibility that could have allowed for creative structuring with greater economic participation by foreign partners. However, the final LOH Reform reinstates the requirement that the state hold an ownership interest greater than 50% in joint ventures. While this reduces some of the structuring flexibility contemplated by the initial draft bill, the LOH Reform still offers meaningful opportunities for foreign participation through enhanced minority shareholder rights and the new contractual framework described below. ... The LOH Reform introduces an alternative upstream business model allowing full private-sector participation. Under this model, Venezuelan state-owned entities or their affiliates may sign agreements (contratos de participación productiva) (“New CPPs”) with private companies domiciled in ... The LOH Reform provides that royalties of up to 30% apply to volumes extracted from any reservoir. The applicable royalty rate for each project will be determined by the Ministry, with the opinion of the Ministry of Finance, considering the nature of the project, required capital investments, economic feasibility, and the need to ensure international competitiveness. The Ministry may adjust the royalty rate within the 30% cap where necessary to preserve the project’s economic equilibrium. This approach differs from the initial draft bill, which set the base royalty at 30% and provided for tiered reductions based on the type of activity: to 20% for primary activities carried out by private companies under contract, and to 15% for activities conducted by joint ventures, in cases of proven economic unviability. The revised framework provides greater flexibility by allowing project-by-project determination of rates within the 30% cap.

Three New OFAC General Licenses Provide an Initial Framework for Operations and Investment in Venezuela’s Oil and Gas Sectors

www.akingump.com, Feb 19, 2026

Key Points - Three GLs issued by OFAC last week— GL 48, GL 49 and GL 50 (replaced and superseded by amended GL 50A)—represent the Trump administration’s first significant actions providing sanctions relief related to upstream oil and gas sector operations in Venezuela. - The issuance of these GLs bookended a trip by U.S. Secretary of Energy Chris Wright to Caracas, where he met with Venezuelan Interim President Delcy Rodriguez and delivered remarks emphasizing the Trump administration’s goal of increasing oil and gas production, among other things, to promote prosperity for the Venezuelan people. - In brief, these GLs authorize the following activities: - GL 48: The provision of goods, technology, software and services from the United States or by a U.S. person for the exploration, development or production of oil or gas in Venezuela. - GL 49: The negotiation of and entry into (but not execution or performance of) contingent contracts for new investment in oil or gas sector operations in Venezuela. - GL 50A: Transactions related to the oil or gas sector operations of specified U.S. and non-U.S. energy companies and their subsidiaries. - As discussed in recent Akin client alerts, OFAC initially issued GL 47 (replaced and superseded by amended GL 46A) and GL 47 to advance the Trump administration’s immediate and ongoing efforts to stabilize Venezuela’s economy, by more narrowly addressing: - GL 46A: The supply chain for Venezuelan oil, which had accumulated in quantities at the limit of Venezuela’s storage capacity. - GL 47: Sales of U.S.-origin diluents to Venezuela, which are essential to the production of Venezuelan crude oil. - Although GLs 48, 49 and 50A include various limitations on authorized activities and parties, as well as conditions, reporting obligations and exclusions, they collectively represent an important further step in sanctions relief for Venezuela and appear to help lay the groundwork for future actions by the Trump administration to promote the rebuilding of Venezuela’s economy. ... - GL 48: All transactions that are ordinarily incident and necessary to the provision from the United State or by a U.S. person of goods, technology, software or services for the exploration, development or production of oil or gas in Venezuela. GL 48 clarifies that these transactions include the processing of payments, certain transactions related to the maritime transport of goods and transactions for the maintenance of oil or gas operations, including the refurbishment or repair of items. - GL 49: All transactions that are related to the negotiation of and entry into contingent contracts for new investment in oil or gas sector operations in Venezuela, provided that the performance of any such contract is made expressly contingent upon separate authorization from U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) (the contingent contracts). - “Note 2 to Paragraph (a)” clarifies that transactions authorized by GL 49 include prefatory steps for such activities, such as conducting commercial, legal, technical, safety and environmental due diligence and assessments. - GL 50A: All transactions that are related to oil or gas sector operations in Venezuela of the entities listed in the Annex to the GLs and their subsidiaries (i.e., as of February 18, 2026: BP PLC, Chevron Corporation, Eni S.p.A., Établissements Maurel & Prom SA, Repsol S.A. and Shell PLC). ... GL 48 and GL 50A contain the following conditions and obligations, which are also included in GL 46A and GL 47: - Specifying the applicability of U.S. governing law and dispute resolution in contracts with the Government of Venezuela (GoV), state-owned oil company Petróleos de Venezuela, S.A. (PdVSA) or entities in which PdVSA owns, directly or indirectly, a 50% or greater interest (PdVSA Entities), all of which remain blocked. - Routing of monetary payments to a blocked person (except for local taxes, permits or fees) into the “Foreign Government Deposit Funds” or other accounts as instructed by the U.S. Department of the Treasury. - Providing detailed reports, according to specified timelines, to the U.S. State Department and the U.S. Energy Department that include the parties involved and other information for each transaction pursuant to the authorization. ... As discussed above, certain transactions related to the sale of U.S.-origin diluents to Venezuela are authorized by GL 47. ... GL 48 broadens the scope of previous sanctions relief by authorizing the provision of certain U.S. items and services related to upstream oil and gas operations. According to the State Department media note, this GL will enable U.S. companies to “[repair] and [upgrade] Venezuela’s oil and gas infrastructure.” In the context of GL 49, however, activities such as “investment” or “contracts to develop or operate oil fields, blocks, or other concessions”— including associated negotiations with, e.g., PdVSA— appear to be beyond the scope of the authorization in GL 48. In any case, investment under GL 48 would be practically challenging due to the exclusion on forming new joint ventures or other entities in Venezuela “to explore or produce oil or gas.” This exclusion indicates that the authorization may, as a practical matter, apply largely to existing oil and gas field suppliers and services companies. ... Taken together, these general licenses demonstrate continued U.S. phasing and calibration of sanctions relief to support the revitalization of Venezuela’s oil and gas sectors consistent with U.S. policy priorities, while maintaining leverage over Venezuela’s newly led government. By focusing on the supply of items and services, GL 48 allows a relatively modest range of activities to help address the dilapidation of Venezuela’s infrastructure. The broader language in GL 49 and GL 50A appears to go farther in some respects, but these authorizations are subject to important limitations: any contingent contracts negotiated under GL 49 require separate approval from OFAC, while GL 50A authorizes transactions related to the oil and gas sector operations of specified major energy companies, allowing them to operate with fewer constraints.

Source

Exxon's Guyana operations not imperiled by Venezuela in Kiskadee Watch, November 12, 2026