President Donald Trump has signaled the possibility of opening the vast oil reserves of Venezuela to the oil and gas majors in the United States, implying that the energy majors in the domestic market have the potential to revive the South American country’s struggling energy business. Although there are several challenges to fixing the broken infrastructure, President Trump wants the U.S. energy giants to invest billions and start contributing to the economy.

Given Venezuela’s heavy, high-sulfur crude profile, could the potential for significant access to its vast reserves significantly improve the outlook for energy majors such as Chevron Corporation (CVX Quick QuoteCVX - Free Report) , Phillips 66 (PSX Quick QuotePSX - Free Report) and Valero Energy Corporation (VLO Quick QuoteVLO - Free Report) ?

Venezuela’s Massive Oil Reserves: What Lies Ahead?

Venezuela has a huge reserve of crude oil. Per the U.S. Energy Information Administration ("EIA"), the proven crude oil reserves in the country were the largest in the world in 2023, estimated at 303 billion barrels. EIA added that this represented about 17% of global reserves. This is expected to create a huge potential for energy companies in the United States.

However, sanctions, nationalism and a lack of appropriate foreign investments have caused production to fall drastically over the past decades. But is the path ahead smooth for U.S. energy companies?

Consulting firm Rystad Energy estimated that to maintain the daily crude production volumes of 1.1 million barrels, there is a need to invest a robust $53 billion over the coming 15 years. Rystad Energy estimated that the required capital investments to boost daily production to 3 million barrels by the end of the next decade, still below Venezuela’s peak production, would be $183 billion. Thus, the road ahead for leading energy players of the United States to revive the South American country’s energy market, if they get access to it, will be quite expensive.

3 US Energy Majors Stand to Gain: CVX, PSX, VLO

Considering the backdrop, Chevron, Phillips 66 and Valero Energy are the leading energy stocks that are well poised to gain. (Learn more about the Best Energy Stocks to Buy Now.)

Chevron

Chevron is an integrated energy giant and is the only energy player from the United States with operations in Venezuela. The U.S. government issued a special license that allowed CVX to continue operating in the South American country through a partnership with state-owned Petróleos de Venezuela. JPMorgan stated that 23% of Venezuela’s production comes from the joint ventures.

Thus, CVX is better placed than any other U.S. energy player to benefit from any shift in policies, as they already have a presence there to boost production. Chevron currently carries a Zacks Rank #3 (Hold).

Phillips 66 and Valero Energy Corporation are leading oil refiners in the United States and are well-positioned to gain if there is a boost in the availability of crude from Venezuela. This is because both PSX and #3 Ranked VLO have complex and advanced refineries that are capable of processing heavier crude with high sulfur content, which is available in the South American country, to produce high-value end products like gasoline, diesel, jet fuel and distillates.

Also, heavier crude is cheaper than lighter crude oil like Brent and West Texas Intermediate, and thus both Phillips 66, sporting a Zacks Rank #1 (Strong Buy), and Valero Energy will likely be capable of boosting their refining margins. You can see the complete list of today’s Zacks #1 Rank stocks here.