The U.S. has said Venezuela’s oil sales must be indefinitely controlled to push through the transition

By Bhallari Srivastava, Nathan Crooks and Jarrett Renshaw

Jan 7 (Reuters) – The United States needs to indefinitely control Venezuela’s oil sales and revenues to make changes it wants to see in the country, Energy Secretary Chris Wright said on Wednesday.

The comments reflect the importance of the South American country’s crude oil reserves to President Donald Trump’s strategy after the US military ousted Venezuelan leader Nicolas Maduro in an attack on the capital Caracas on Saturday.

“We need to have that leverage and control of those oil sales to make the changes that must happen in Venezuela,” Wright said at the Goldman Sachs Energy, Cleantech and Utilities Conference in Miami.

Moving stored oil to market first

He said the U.S. would first market Venezuela’s stockpiled oil, then sell ongoing future production, including at U.S. refineries specially equipped to process it, with the revenue deposited into accounts controlled by the U.S. government.

Wright added that he was speaking with U.S. oil companies to see what conditions would enable them to enter Venezuela to help boost production there.

“The resources are immense. It should be a rich, prosperous, peaceful energy powerhouse,” he said.

“That’s the plan.”

On Tuesday, Caracas and Washington reached an agreement to export up to $2 billion of Venezuelan crude oil to the United States, a deal that would help Venezuela avoid deep oil production cuts and divert supplies from China.

The deal is a sign that Venezuelan government officials are responding to Trump’s demands that they open up to U.S. oil companies or risk further military intervention.

Trump has said that interim President Delsey Rodriguez wants to give the U.S. and private companies “full access” to Venezuela’s oil industry.

“Instead of oil being blocked like we are now, we’re going to have oil flowing,” Wright said at the conference.

Selling Venezuelan oil “will benefit the American people, the American economy and global energy markets, but it will also greatly benefit the Venezuelan people,” he said.

Shares of American refiners Marathon Petroleum, Phillips 66 and Valero Energy rose by 2.5% to 5%.

White House meetings

Increasing crude output from Venezuela is a top objective for Trump, who is scheduled to meet with the heads of major oil companies at the White House on Friday, according to the sources.

Representatives of ExxonMobil, ConocoPhillips, and Chevron — three top U.S. companies, all of which have experience in Venezuela — will attend, according to sources familiar with the plan.

The companies declined to comment.

Venezuela was producing 3.5 million barrels per day in the 1970s. But mismanagement and limited foreign investment led to a sharp decline in annual output, which averaged 1.1 million bpd last year.

Wright believes a short-term production increase is possible in Venezuela, but said a major recovery to past production levels will take years.

“We can get millions of barrels a day of additional production in the short to medium term if there is a case for a little capital mobilization,” Wright said. “To get back to historical production numbers, you know that takes tens of billions of dollars and significant time,” he said.

The South American country sits atop the world’s largest oil reserves but accounts for only about 1% of global supply.

(Reporting by Nathan Crooks and Sheila Dang in Miami and Vallari Srivastava in Bengaluru; Writing by Richard Waldmanis; Editing by Soumyadeb Chakraborty, Sriraj Kalluvilla, Rod Nickle)