U.S. Will Control Venezuelan Oil Sales Indefinitely, Trump’s Energy Secretary Says

Energy Secretary Chris Wright says the U.S. plans to control Venezuelan oil sales and revenues as part of a long-term strategy to reshape production and exports.

(Reuters) — The U.S. needs to control Venezuela's oil sales and revenue indefinitely to drive the changes it wants to see in the South American country, Energy Secretary Chris Wright said on Jan. 7.

(Image source: Global Energy Infrastructure, Petroleum Economist, PDVSA)

The comments reflect the importance of crude oil to President Donald Trump's strategy in Venezuela since U.S. forces ousted the country's leader, Nicolas Maduro, in a raid on the capital Caracas on Jan. 3.

"We need to have that leverage and that control of those oil sales to drive the changes that simply must happen in Venezuela," Wright said at the Goldman Sachs Energy, CleanTech & Utilities Conference in Miami.

The OPEC member nation sits atop the world's largest oil reserves but accounts for only about 1% of global supply.

Stored Oil Moving to Market First

Wright said the U.S. would market stored Venezuelan oil and then sell ongoing future production, including to U.S. refineries specially equipped to process it, with revenues deposited into accounts controlled by the U.S. government.

Such sales already have begun and the U.S. has engaged "the world's leading commodity marketers and key banks" to execute and provide financial support for them, according to a statement from the U.S. Department of Energy.

Wright added he was speaking to U.S. oil companies to learn what conditions would enable them to enter Venezuela to help boost the country's production.

"The resources are immense. This should be a wealthy, prosperous, peaceful energy powerhouse," he said.

"That's the plan."

On Jan. 6, Washington announced a deal with Caracas to export up to $2 billion worth of Venezuelan crude to the United States. The agreement is a sign that Venezuelan government officials are responding to Trump's demand that they open up to U.S. oil companies or risk more military intervention.

Trump has said he wants interim Venezuelan President Delcy Rodriguez to give the U.S. and private companies "total access" to her country's oil industry.

"Instead of the oil being blockaded, as it is right now, we're going to let the oil flow," Wright said at the conference.

Selling the oil "will benefit the American people, the American economy and global energy markets, but of course, it will also massively benefit the people of Venezuela," he said.

Shares of U.S. refiners Marathon Petroleum, Phillips 66 and Valero Energy were up between 2.5% and 5%.

White House Meetings

Raising crude output from Venezuela is a top objective for Trump, who is scheduled to meet with the heads of major oil companies at the White House on Jan. 2.

Representatives from Exxon Mobil, ConocoPhillips, and Chevron - the top three U.S. oil companies - would be present, according to a source familiar with the planning.

The companies, all of which have experience in Venezuela, have declined to comment.

White House spokeswoman Karoline Leavitt said at a press briefing that oil companies "are absolutely eager to invest. They're eager about these opportunities."

Chevron is the only U.S. oil major operating in Venezuela's oil fields.

Exxon Mobil and ConocoPhillips were major producers in the country before their projects were nationalized by former President Hugo Chavez nearly two decades ago.

Venezuela was producing as much as 3.5 million barrels per day in the 1970s. But mismanagement and limited foreign investment have since led to a huge drop in annual production, which averaged about 1.1 million bpd last year.

Wright said he believed short-term production increases in Venezuela are possible, but that a bigger recovery to past production levels would take years.

"We could get several hundred thousand barrels a day of additional production in the short to medium term if the conditions are there for just small capital deployments," Wright said.