Why Exxon Mobil CEO called Venezuela ‘uninvestable’ — ‘What will returns look like?’

Leading oil corporation executives have told US President Donald Trump that investing in Venezuela would require significant reforms. In a meeting on Friday, the oil executives expressed caution about the President's push to push for them to spend at least $100 billion to rebuild Venezuela.

The executives, including the head of Exxon Mobil Corp, seemed to be cautious about such a move during the meeting where Trump convened nearly 20 industry representatives in the East Room of the White House and urged them to reinvigorate operations in the oil-rich country.

But Exxon Chief Executive Officer Darren Woods had one of the strongest reservations about the proposal, calling Venezuela ‘uninvestable’.

Here is why he said that.

Why is Venezuela ‘uninvestable’?

Exxon CEO Darren Woods cited multiple reasons to prove his point of skepticism.

“We've had our assets seized there twice and so, you can imagine, to re-enter a third time would require some pretty significant changes,” he said.

“If we look at the legal and commercial constructs and frameworks in place today in Venezuela -- today, it's uninvestable,” Woods added.

His comments indicated that Trump may need some more convincing in order to make US oil companies go to Venezuela and start their operations.

“How durable are the protections from a financial standpoint? What will the returns look like? What are the commercial arrangements, the legal frameworks?” Woods asked.

Trump's Friday meeting with the oil executives at the White House came less than a week after the US captured Venezuela President Nicolas Maduro on drug allegations and bombed his country, killing around 100.

“All those things have to be put in place in order to make a decision to understand what your return would be over the next several decades,” the Exxon CEO said.

Why investing in Venezuela may not yield desired results

According to a report by news agency AFP quoting analysts, Donald Trump is pushing to revive the oil industry in Venezuela on a “shaky economic and strategic ground”.

Experts cited by AFP said that the vast oil reserves in Venezuela on paper do not automatically translate into quick and profitable production. This is because the South American country suffers from factors including outdated infrastructure, political instability, heavy crude that is costly to extract, and investor unease in a world shifting away from fossil fuels.

Rich Collett-White, an energy analyst at Carbon Tracker, told AFP that extracting oil in Venezuela may pose questions.

“There's lots of talk about the size of the reserves – 300 billion barrels of proved reserves – but what's often missing from the conversation is how realistic it is for those to be economically extracted,” he was quoted as saying.