Sources say Exxon is in advanced talks about returning to Venezuela's Orinoco Belt.

ExxonMobil has been in talks to return to Venezuela. The US energy giant is interested in the huge Petromonagas project, which was previously a part of the Orinoco Belt. It also showed interest in certain areas in the Carabobo Block.

If finalized, a re-entry by Exxon into Venezuela would be a stunning?reversal? for?the?company after it left the OPEC nation nearly 20 years ago amid a dispute triggered because the government of the former president Hugo Chavez nationalized its oil projects.

Exxon is still waiting for rivals to complete deals, after US President Donald Trump encouraged companies to invest in Venezuela in the wake of the January capture of Nicolas Maduro. Darren Woods, the CEO at the time, sparked Trump's ire when he called Venezuela "uninvestable."

Nevertheless, the company sent technical teams to Venezuela this year to assess oilfields.

Continental Resources, founded by billionaire Harold Hamm, signed a Memorandum of Understanding with Venezuela's PDVSA on Wednesday to develop and operate the Ayacucho?2 region in the Orinoco region, Venezuela's most prolific production area.

Eni, a company from Italy, and Chevron, a US oil giant, signed a final agreement in Caracas earlier this month to expand their projects and increase the country's oil production.

EXXON CONSIDERES RETURN TO CERRO?

Exxon, after failed negotiations with PDVSA earlier this year for other areas offered, is now considering returning to Petromonagas (formerly known as Cerro Negro). Exxon was once the main project of the country and this field is still one of few with an operational upgrader that can turn the Orinoco extra heavy crude into lighter grades for export.

After Exxon left Venezuela in 2007, the Russian energy giant Rosneft bought a 40% stake of Petromonagas. This stake was then transferred in 2020 to Roszarubezhneft. A state-owned firm, Roszarubezhneft took over Russian assets overseas to shield them against US sanctions. The impact of Russian ownership on any deal is not yet known.

Both the Venezuelan and Russian government have stated that Russia still holds a'stake' in Petromonagas, and other large oil project it shares with state company PDVSA.

"We have agreements, with China and Russia, involving joint-ventures that are authorized to perform primary activities. "We fully respect these agreements and, in relation to the joint ventures where they have a stake, they will continue their operations," Venezuelan Oil Minister Paula Henao stated earlier this month during a television interview.

The Trump administration has made it clear that they intend to increase the presence of US companies in Venezuela while restricting the access of "adversaries" such as China and Russia.

Exxon-PDVSA has not responded to comments immediately.

The Wall Street Journal, Bloomberg and other media outlets reported on Exxon's negotiation earlier in the day.

THE EXXON AVANTAGE

Exxon operated Cerro Negro, with a 41.67 percent interest in the project. It was then nationalized by PDVSA and? taken over completely.

Exxon executives said the company would be in a better position if it returned to Venezuela, due to its past operations and its familiarity with heavy and extra-heavy crude oil resources. Venezuela has the largest oil reserves in the world, the majority of which is concentrated in the Orinoco Belt.

Woods said that the experience of the company in Canada with heavy oil extraction is a key advantage.

He said that in May, "The work we've done up in Canada... places us in a unique position in terms of low cost production of the Venezuela resource."

According to documents and sources, the PDVSA's Petromonagas is in operation, but it will need major repairs and maintenance after years of inadequate investment due to US sanctions, and the need to produce feedstock instead of exportable crude oil for the country.

CONOCOPHILLIPS AT IMPASSE UNTIL DEBT REPAYMENT

According to sources with knowledge of the situation, ConocoPhillips - the third largest US oil producer in terms of volume - is refusing to enter into any discussions to return to Venezuela until the company receives the $11 billion it owes the country and PDVSA for the expropriation projects.

ConocoPhillips didn't immediately respond to an inquiry for comment.

Hamaca and Petrozuata, two other heavy crude projects in Orinoco, were also nationalized by the company in 2007. Conoco, like Exxon in 2007, also left the country and filed an international arbitration.

Arbitration courts, after years of dispute have?considered expropriation as "unlawful", awarding ConocoPhillips millions of dollars. The company still seeks to collect the majority of the money due to an unfinished agreement with PDVSA and attempts to seize its Caribbean assets.

"That is our top priority at the moment." We owe them a substantial amount of money, and we have been pursuing that," said Ryan Lance then CEO in February.

(source: Reuters)