US energy giants Exxon Mobil (XOM) and ConocoPhillips (COP) are mulling a return to Venezuela after nearly two decades, pushing for contractual safeguards and the recovery of billions owed since their exit, Bloomberg reported citing people familiar with the matter.
Both companies have reportedly held discussions with the government of President Delcy Rodriguez, who has led the country since the US arrest of her predecessor Nicolas Maduro, to tap the South American nation's massive oil reserves.
While they said much has yet to be done regarding production sharing agreements and other matters, they were encouraged by the willingness of Rodriguez and her administration to negotiate different aspects of the contracts.
The companies are reportedly looking for ways to structure their investments to prevent a repeat of losses they suffered when their assets were previously nationalized.
This includes the use of stability clauses, which prevent successive governments from unilaterally changing contracts, and requiring all disputes to be settled via international arbitration instead of local courts.
"Bringing back Exxon Mobil and ConocoPhillips is a top priority for the government, and they're putting a lot of resources and effort behind it," said Carlos Bellorin, an executive vice president at Welligence Energy Analytics, told Bloomberg.
He said the deal needs to be attractive to persuade these companies to invest.
Chevron (CVX), another major US oil and gas company, has remained present in Venezuela throughout the nationalizations by former President Hugo Chavez. That positions it well now to ramp up output, with crude hovering around $100 per barrel.
Neither ExxonMobil nor ConocoPhillips immediately responded to' request for comment.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)