Shell Eyes Venezuelan Gas as Sanctions Ease and Markets Shift

Shell plc SHEL is reportedly considering a return to Venezuela as political and policy changes raise the prospect of renewed foreign investment in the country’s energy sector. The British oil major has long targeted the gas-rich area between Venezuela and Trinidad and Tobago, but U.S. sanctions and licensing delays have stalled progress for years. Recent intervention by U.S. President Donald Trump has revived expectations that projects once frozen could now move forward.

At the center of Shell’s interest is the Dragon gas field, located in Venezuelan waters. If developed, the project could generate around $500 million in annual revenues for up to 30 years, translating into a multi-billion-dollar opportunity over its lifetime.

The Scale of the Dragon Gas Opportunity

The Dragon field is estimated to hold around 120 billion cubic meters of gas — roughly three times the U.K.’s annual consumption. Even larger gas deposits sit in nearby fields, underlining the strategic importance of the region for international energy companies seeking long-term gas supply.

Despite its potential, development has been repeatedly delayed due to regulatory uncertainty and negotiations with U.S. authorities over sanctions waivers and licensing. With Washington now signaling support for renewed investment, Shell is expected to refocus its attention on Venezuela, though it has declined to comment publicly.

U.S. Policy Shift and the Role of American Majors

Following the removal of president Nicolás Maduro, the Trump administration has reframed its Venezuela strategy around energy development. Trump has publicly urged oil companies to invest billions of dollars to repair infrastructure and revive production, while emphasizing that U.S. firms should take the lead.

Chevron Corporation CVX currently stands out as the only global supermajor operating in Venezuela and remains the country’s largest foreign investor. Analysts suggest U.S. majors — Chevron in particular — are best positioned to secure early access. European companies like Shell and BP p.l.c. BP may be invited later through joint ventures, helping American firms spread political and financial risk.

BP’s Position and Broader Industry Caution

BP also has exposure to the region through its Manakin-Cocuina exploration and production license, awarded in 2024. However, U.S. approvals were revoked last year, prompting the company to lobby for reinstatement. Like Shell, BP has remained cautious in its public statements amid uncertainty over Venezuela’s political and regulatory future.

Across the industry, companies have been reluctant to commit capital openly. Chevron has emphasized compliance with all laws and a focus on employee safety and asset integrity, highlighting the sensitive operating environment.

Venezuela’s Vast Resources & Limited Output

Venezuela holds the world’s largest proven oil reserves, exceeding 300 billion barrels by government estimates, yet ranks only 20th globally in production. Current output stands at about 900,000 barrels per day, with Chevron accounting for roughly one-third.

Much of Venezuela’s crude is heavy and viscous — highly valued by refiners in the U.S. Gulf Coast, China and India for its strong margins. As U.S. shale production skews toward lighter oil, Venezuela’s heavy crude remains strategically attractive despite degraded infrastructure and operational challenges.

Market Headwinds & Investment Risks

Trump’s push to ramp up Venezuelan production comes at a time of ample global oil supply and prices below $60 a barrel. These conditions dampen appetite for large, high-risk investments, especially when lower-risk opportunities exist elsewhere. Industry veterans note that capital will flow toward regions offering clearer returns and regulatory certainty.

Compounding the risk is Venezuela’s long history of expropriation. Major oil companies, including Exxon Mobil and ConocoPhillips, exited the country in 2007 after asset seizures and pursued lengthy arbitration cases. Legal uncertainty remains a major deterrent for potential investors.

Implications for OPEC and Global Oil Markets

An opening of Venezuela to Western energy companies could significantly disrupt OPEC’s influence. Increased Venezuelan output threatens to weaken the cartel’s already fragile control over supply and prices. Analysts warn that additional production — potentially 1-2 million barrels per day — could push global markets into surplus.

Oil prices fell drastically in 2025, the steepest annual drop since the 2020 pandemic, underscoring OPEC’s waning power. Although OPEC+ has agreed to pause supply increases in early 2026, renewed Venezuelan production could further pressure prices and reshape global oil flows.

Rebuilding an Industry From the Ground Up

Beyond politics and markets, Venezuela faces deep structural challenges. Years of mismanagement, corruption and state interference have hollowed out its energy sector, driving skilled workers abroad and leaving infrastructure in disrepair. Experts argue that revival will require sweeping reforms like debt restructuring, resolution of arbitration claims and access to multilateral financing.

Rebuilding Venezuela’s oil industry would demand sustained international support. For Shell, currently carrying a Zacks Rank #3 (Hold), and its peers, Venezuela offers immense resource potential, but realizing it will depend on durable political guarantees, stable institutions and a credible path to long-term returns.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research