The Wall Street Journal reports:

Investors appeared to like the idea that Venezuela could become a new frontier for U.S. oil companies, or a bigger one for Chevron. Chevron’s shares rose about 5% Monday. Exxon Mobil’s shares rose about 2%; ConocoPhillips was up almost 3%.

For now, Chevron has no plans to increase spending or boost production significantly, people familiar with the matter said. The Houston oil giant is wary of committing new capital there until the country is more stable and questions around commercial agreements get resolved. It has also never advocated for regime change in Venezuela with the administration, they said.

“Chevron remains focused on the safety and well-being of our employees, as well as the integrity of our assets,” a Chevron spokesman said. “We continue to operate in full compliance with all relevant laws and regulations.”

He said Chevron doesn’t comment on commercial matters or speculate on future investments.

Venezuela’s government estimates that the country has about 300 billion barrels of oil in reserves, which, if true, would make it the largest oil bounty on the planet. The country’s current output comes to roughly 900,000 barrels a day, less than 1% of the world’s daily consumption of oil.

Boosting that production would improve economic conditions in the country, which the Trump administration hopes will stem the flow of migrants from Venezuela to the U.S. and keep energy prices low for consumers. But the largest U.S. oil companies best positioned to plow money into Venezuela haven’t committed to the venture thus far.

Two other U.S. oil companies with the scale and expertise in heavy oil to invest in the Latin American country—ConocoPhillips and Exxon—haven’t signaled any plans to re-enter the country that nationalized their assets there in the mid-2000s. ConocoPhillips has said it is premature to speculate on new investments. Exxon didn’t respond to requests for comment.

The large oil companies’ lack of an immediate appetite to make new investments in Venezuela could be a significant blow to the Trump administration’s attempt to overhaul the country’s government, said Dan Pickering, chief investment officer at Pickering Energy Partners. [Continue reading…]