Chevron, SLB signed Venezuela oil deals. Can smaller Houston firms do the same?

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Chevron and SLB have signed major Venezuela oil deals, but political uncertainty and financial risks are keeping smaller Houston firms on the sidelines.

As summer came to its unofficial end, the U.S. oil and gas industry watched ink dry on its first major deals struck with Venezuela.

Among those that have struck deals were historic independent wildcatter Hunt Oil; Houston’s largest oilfield services firm, SLB; the only U.S. company already producing in Venezuela, Chevron; and the U.S. government itself.

The contracts signed over the past few weeks appeared to be a big win for the Trump administration, which has touted Venezuela as the opportunity of a lifetime for the entire industry after the January overthrow of President Nicolás Maduro.

Industry experts say small and less-established independent companies have largely stayed away because they consider cutting deals in Venezuela still too risky.

The large, established companies that have secured contract work have the finances and political connections to pursue opportunities that largely hinge on the Trump administration’s push for Venezuelan crude — and to overlook the country’s billions in debts, crumbling infrastructure and political turbulence, experts say.

But even large industry players may be wary of the U.S. government’s deal with a Venezuelan company, industry experts say.

Many in Venezuela’s current government are “biting their tongues and grinding their teeth” over these deals signed, so far, with U.S. companies, but feel they have to accept them until the industry is rebuilt and they have the opportunity to retake power, said Mark Jones, a political science professor at Rice University who specializes in Latin American studies. Small U.S. companies would have a harder time withstanding that type of uncertainty, Jones said.

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Chevron, SLB signed Venezuela oil deals. Can smaller Houston firms do the same?

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