A preliminary memorandum of understanding signed in Caracas this week between ExxonMobil, Venezuela's state oil company PDVSA and the interim Venezuelan government provides the US oil major with exclusive, time-limited rights to evaluate seven areas for possible development, sources close to the negotiations said.
The agreement, which the parties described to sources as non-binding, gives Exxon a one-year window to negotiate terms and to review subsurface and other technical data for the fields under consideration, according to people familiar with the talks. Those areas include a mix of undeveloped fields, mature assets and a separate exploration block.
Company officials declined to expand beyond a brief statement issued after the signing in Caracas on Monday that called the memorandum a "meaningful first step." Venezuela's oil ministry and PDVSA did not immediately reply to requests for comment.
Sources who discussed the agreement said Exxon was offered a different configuration of areas earlier in the year, which it rejected. Since then, discussions have centered in part on several heavy oil blocks located in the Orinoco Belt, Venezuela's largest producing region. One of the specific assets under consideration is Petromonagas - historically known as Cerro Negro - where Exxon operated prior to the expropriation of its assets in 2007.
Petromonagas is notable within the talks because it remains one of the few projects in Venezuela with an operational upgrader that converts extra-heavy crude into grades suitable for export. Exxon is also reported to be examining three additional areas in the Orinoco that include a combination of developed and undeveloped fields. Separately, the company is negotiating exploration rights at a distinct block, two sources said.
The structure of any final portfolio that Exxon might eventually secure will be a central determinant of the company's commercial prospects in Venezuela. If Exxon can align operations in Venezuela with its nearby activities in Guyana and Trinidad and Tobago, it could create operational efficiencies, the sources said. Exxon leads the consortium developing Guyana's Stabroek block and holds exclusive rights to a large deepwater exploration area off Trinidad and Tobago.
At least two of the projects reportedly being discussed - Petromonagas and Petrovictoria - involve existing Russian participation, and how that will be resolved remains an open issue in the negotiations. Following Exxon's expropriation, Rosneft took a 40% stake in Petromonagas, and that stake was transferred in 2020 to Roszarubezhneft, a Russian state-owned entity described by sources as having been created to protect Moscow's overseas assets from US sanctions. The Russian government has publicly characterized that company as a stakeholder in those and other Venezuelan energy ventures.
Venezuela's oil minister Paula Henao has said publicly this year that the government fully respects agreements with Russia and China, and that joint ventures in which those countries hold stakes would continue to operate. The memorandum does not specify how ongoing stakes held by Russian entities would be addressed, and Exxon has not made any public statements on Russian interests in the assets it is evaluating.
Negotiations of the sort opened by this memorandum closely resemble pacts other international oil companies have negotiated this year to secure an entry point into Venezuela's energy sector. Under the terms described by sources, Exxon has exclusivity for a one-year period to negotiate contract terms and access the data required to assess subsurface potential and commercial viability.
Parties involved in the talks requested anonymity when discussing the confidential details of the agreement. The sources emphasized that the memorandum is preliminary and non-binding - an initial framework rather than a finalized investment decision.
A potential return by Exxon to Venezuela would represent a notable development, coming decades after assets were nationalized under the government of former President Hugo Chavez. Company executives have previously warned about the investment environment in Venezuela. In January, shortly after US forces removed then-President Nicolas Maduro from power, Exxon's CEO Darren Woods described Venezuela as "uninvestable" during a White House meeting, saying more safeguards would be necessary to protect long-term investments from risks such as future expropriations.
Since an oil reform advanced by interim President Rodriguez earlier this year opened the sector to new entrants, Exxon's public tone has shifted. During the company's third-quarter earnings call, management said progress had been made toward improving fiscal and legal terms. The company also said that any future investment would require "stable policies, clear regulations, strong investment protections and competitive returns," reinforcing the conditional nature of any re-entry.
US Energy Secretary Chris Wright commented on social media this week that Exxon's preliminary agreement marked "tremendous progress in a remarkable short time," underscoring the administration's interest in the development of Venezuela's oil sector. The memorandum was signed in Caracas in the presence of interim President Delcy Rodriguez, according to people familiar with the event.
How Russia's role in specific joint ventures will be managed, whether Exxon will proceed to finalize contracts and the ultimate composition of any portfolio of assets the company secures remain uncertain. The memorandum provides Exxon access and a negotiation window, but it does not commit the company to investment or specify the contractual details that would govern future operations.
Context for industry participants
For oil companies, midstream operators and investors focusing on cash flow durability and balance sheet risk, the arrangement signals a potential avenue for Western majors to re-enter Venezuela's resource base, while highlighting unresolved questions about asset ownership, legal protections and fiscal terms. The nature and timing of any investments will hinge on the outcomes of negotiations and on the resolution of ownership stakes in projects where foreign partners, including Russian entities, hold material positions.