Axios: Energy Dept. draws fire for slow pace of Venezuelan oil deals

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Nearly eight months after President Trump predicted U.S. companies would "rapidly rebuild Venezuela's dilapidated oil industry" to boost production, no new petroleum deals have been finalized there with American firms, Axios reveals.

Why it matters: The price of oil is climbing as the Iran war squeezes global supplies, spotlighting the absence of finalized deals in Venezuela — a nation with the highest estimated petroleum reserves on the planet.

"We have no new concessions. No new deals. It is absolutely a problem," a senior U.S. official told Axios. "The Energy Department is in charge of this and they have some explaining to do."

The Energy Department and its defenders call the criticisms misleading and unfair.

Zoom in: Nicolas Maduro was ousted by U.S. forces Jan. 3. Six days later, Trump met with oil industry officials and said the U.S. is "going to be making the decision" about which firms would help "rapidly" rebuild in Venezuela.

"You're dealing with us directly," Trump said. "You're not dealing with Venezuela at all. We don't want you to deal with Venezuela."

Between the lines: Trump's promise was hampered by two divides — one in his own government; the other in the oil industry.

The oil industry is separated between major global firms that move relatively slowly and deliberatively, and smaller independent firms — nicknamed "wildcatters" — known for their speed and higher risk tolerance.

The "majors," like Exxon and ConocoPhillips, publicly made clear they were cool to the idea of going back to Venezuela because of all the uncertainty. But several wildcatters were eager to get in.

A new complication: Two earthquakes June 28 badly damaged Venezuela.

Friction point: Trump's former top adviser in Venezuela, Mauricio Claver-Carone, accused the Energy Department of favoring the major oil companies over the wildcatters.

"Instead, American wildcatters got stuck with onerous conditions and a competitive disadvantage versus the mostly foreign majors that were in bed with Maduro."

"NEDC was there early advocating for the wildcattters. But Energy is really turf-obsessed. And Energy won. The problem now is that they own this," said one oil industry insider.

Behind the scenes: Two other independent companies shared documents with Axios showing that, for months, they asked the Energy Department to force PDVSA to recognize standard international high-risk contracts for oil drilling, but not enough was done.

"We're months behind. We'd be lifting oil now if we got half the deference the majors got," one wildcatter told Axios.

"The problem isn't that Energy is doing too much in Venezuela — it's that they're doing it for the wrong customers," said a representative of another oil firm. "Put the wildcatters in the fields and production shoots up straight away."

For weeks, White House officials have fielded industry complaints as well as requests that Secretary of State Marco Rubio take over the portfolio from Energy Secretary Chris Wright.

Rubio has deferred to the Energy Department's expertise, partly because many firms want the U.S. government to "pick winners and losers" by favoring one company over another.

The major companies, meanwhile, are battling to redevelop some of the same fields, according to the Wall Street Journal.

By the numbers: Venezuela produces about 1.2 million barrels of oil today. That's slightly above the 1.1 million barrels daily it was producing before Trump instituted a blockade-like quarantine in November and then seized Maduro to start the year.

At its peak, Venezuela produced about 3.4 million barrels daily in 1998.

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