'A bit of FOMO': Oil companies give Venezuela a second look amid Mideast chaos

Oil companies large and small are showing new interest in committing to drill in Venezuela, after nearly six months of reluctance following the U.S. removal of Nicolás Maduro and the Trump administration's subsequent call for them to invest, industry lawyers and consultants familiar with the issue tell POLITICO.

One of the largest deciding factors, they said, is the newly exposed fragility of the Middle East as an energy supplier, which the fighting between the U.S., Israel and Iran has put on full display.

"You see this view industry-wide, right or wrong, that there's a long-term disruption going on all over the market," said Jason Bennett, global projects director at law firm Baker Botts. Venezuela is "looking pretty good right now, despite their historical problems."

While the White House has in the past several months highlighted non-binding agreements that some smaller companies have signed to develop Venezuelan oil fields, industry officials are saying they expect big contracts to land soon. Formal, binding deals would be a big win for the White House, which has tried with little luck so far to cajole the industry to get into Venezuela even before it captured the country's former president, Maduro, in January.

Larger international companies are now giving Venezuela — and its South American neighbor Argentina — a closer look as oil supply out the Strait of Hormuz remains all but shuttered, Bennett said. President Donald Trump announced a peace deal between the U.S. and Iran on Sunday that he said would "fully authorize the toll-free opening" of Hormuz.

The Venezuelan government's reforms to its laws regulating the industry are still not perfect, but are going enough in the right direction to assuage the worst fears of U.S. industry executives, Bennett added.

Companies are in discussions with White House officials about committing to develop specific oil fields in a country with the world's largest crude reserves. The mood is becoming more serious as companies are overcoming their earlier worries about working with Venezuela's government and oil prices remain higher than the $67 a barrel they were before the fighting with Iran started, the industry officials said.

The Venezuelan government has started to hold aside fields for companies that sign non-binding memorandums of understanding, essentially allowing those companies to informally claim areas as long as their deal-making continues, people familiar with the talks said.

"I've signed up probably as many new clients over the last few weeks than I did when things first 'opened up,'" said an industry lawyer whose clients have talked to the White House about the possibility of drilling in Venezuela and who was granted anonymity because he wasn't authorized to speak to the press.