Hello and welcome to Energy Source, coming to you from New York, where oil traders are closely watching Donald Trump’s handling of twin crises in Venezuela and Iran.
The US president on Wednesday appeared to ease market concerns — at least temporarily — that he was about to launch a military attack against Iran over the ruling regime’s deadly crackdown on protesters.
“We’ve been told that the killing in Iran is stopping, and it’s stopped. It’s stopping, and there’s no plan for executions, or an execution,” Trump said from the Oval Office.
His comments caused oil prices to dip, calling a halt to several consecutive sessions of increases fuelled by concerns of supply disruptions. Brent crude, which had settled 1.6 per cent higher at $66.52, fell more than $1 in early trading in Asia on Thursday.
Meanwhile, US energy secretary Chris Wright is trying to cobble together a strategy (in record time) that will give US oil companies confidence to invest $100bn in Venezuela’s oil sector.
This is very much a work in progress. But it seems very unlikely that oil companies will be able to rely on financial guarantees provided by the US government. Trump told oil executives during a White House meeting on Friday that the biggest companies in the world “know the risks”.
“I hope I don’t have to give a backstop,” he added.
Energy Source has been told Democrats plan to table a bill in the House of Representatives prohibiting the US government from funding Venezuela’s oil infrastructure.
“Our bill sends a message — don’t waste taxpayer dollars in support of Trump’s adventurism in Venezuela,” said Lloyd Doggett, a Democratic member who represents central Texas communities in the House.
Our main item is an exclusive interview with Halliburton chief executive Jeff Miller, who worked in Venezuela’s oilfields decades ago and is upbeat about the prospects of rebuilding the nation’s oil infrastructure.
Thanks for reading, Jamie
Why Halliburton expects a ‘straightforward’ return to Venezuela
Halliburton has said it aims to swiftly re-enter Venezuela to help rebuild the nation’s dilapidated oil and gas infrastructure, playing down the risks of responding to US President Donald Trump’s call for $100bn in oil industry investment.
Jeff Miller, chief executive of the oil services company, told Energy Source the business model of companies in his sector meant they were not exposed to the same level of risk as oil and gas operators, which have to sink large amounts of capital into projects over decades to earn a return.
But some form of non-government-backed assurance structure to ensure service providers were paid by Venezuela’s state oil company, Petróleos de Venezuela (PDVSA), and other local operators would build confidence within the industry, he said.
Miller said: “Obviously, we want stability and we have to be paid for our services. But the idea that we’re putting assets in the ground that stay there 20 years [isn’t the case]. Our assets move around, they can be moved out of countries, into countries. Very different profile to an oil and gas operator.”
“I would think some assurance of payment from PDVSA in order to get to work would be another thing that could be solved and can see a path to that solution. But I don’t see it as US government dollars paying for anything,” he added.
US oil companies are seeking security, legal and other guarantees from Washington to ensure Venezuela’s government does not expropriate future investments. ExxonMobil’s chief executive Darren Woods said at a meeting between Trump and senior oil executives last Friday that the Caribbean country remained “uninvestable” without “serious changes”.
But Trump has ruled out providing financial guarantees or assurances backed by US taxpayer funds to oil companies that invest in Venezuela.
Miller said one possibility was money generated from the 50mn barrels of oil Venezuela has begun turning over to US authorities could potentially be used to provide the industry with assurances.
Halliburton exited Venezuela in 2019 when the US imposed sanctions on the regime of strongman leader Nicolás Maduro, which limited the ability of American companies to operate in the country. It is now negotiating to receive a new licence to operate in that country following the Trump administration’s capture of Maduro and plan to rebuild and control the country’s oil sector.
“I think the getting back into the country is fairly straightforward and I expect that will be achieved in short order,” said Miller, who worked in Venezuelan oilfield operations early in his career.
“Venezuela is significant, it has the largest proven oil reserves in the world. And so it is clearly of interest to many operators, some small, some big.”
Miller said Halliburton could be active in the Venezuelan market within “months” rather than years.
“The first step is to get more oil from existing wells — and that happens more quickly. We call that intervention work, but effectively repairing surface facilities and doing work to repair the wells so that they produce more. That’s not finding new oil, but that’s getting more oil produced.”
“To grow oil production over time does require new wells and more development. And that takes more time. I mean, that’s a few years probably. But I think that an impact can be made fairly quickly by repairing the wells that are there.”
Some analysts have said SLB, the world’s largest oilfield service company, formerly known as Schlumberger, is now in pole position to win the first round of contracts in Venezuela because it retained an existing presence in the country despite US sanctions.
But Miller rejected that view, noting Halliburton could move equipment and skilled employees into Venezuela rapidly from other parts of Latin America and further afield.
“We can move quickly. Look, we have 600 Venezuelans that work for Halliburton today all over the world. We’ve been there since 1938. I worked there. We have a number of our executives who have worked in Venezuela throughout their career. So we have the ability to move quickly.”
“My expectation is that Venezuela would represent a very good, high-return opportunity given the importance of producing oil and gas sooner rather than later. And for that reason, it would free up assets from other parts of the world.” (Jamie Smyth)
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Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard, Malcolm Moore and Ryohtaroh Satoh, with support from the FT’s global team of reporters. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.
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