HOUSTON (Nov 9): ExxonMobil said on Monday that it signed a memorandum of understanding, or a non-binding agreement, to explore potential upstream opportunities in Venezuela with state-owned oil firm PDVSA.

"This memorandum is a meaningful first step, but any future investment would require stable policies, clear regulations, strong investment protections and competitive returns," the company said in a statement.

Exxon did not disclose which projects or oil areas it was evaluating.

A final contract for a joint venture or production-sharing agreement would be needed to confirm the company's participation in oil exploration or production in Venezuela.

If the top US oil producer moves toward development, it would represent a remarkable return for Exxon to Venezuela after exiting nearly two decades ago when its previous assets were expropriated by the government of former President Hugo Chavez.

It would also be a win for US President Donald Trump, who has pushed to remake the South American nation's energy sector with US companies at the forefront after American forces removed Venezuelan President Nicolas Maduro from power in a January raid.

Exxon operated the former Cerro Negro heavy crude project, now named Petromonagas, with a 41.67% stake before the expropriation. It also held a 50% interest in the La Ceiba project located in the southern Maracaibo basin.

Exxon affiliates filed a request for arbitration against Venezuela before the World Bank's International Centre for Settlement of Investment Disputes in 2007. In 2014, ICSID issued an award of US$1.6 billion plus interest dating back to 2007, in favour of ExxonMobil.

Venezuela has challenged the award and the matter remains pending.

Reuters has reported Exxon was interested in returning to the Petromonagas project and was also exploring neighbouring areas in the Carabobo block.

The Petromonagas project has one of the few working upgraders capable of turning the Orinoco's extra-heavy crude into lighter exportable grades.

In January, shortly after Maduro's removal, Exxon CEO Darren Woods called the country "uninvestable" and said much more work needed to be done to protect long-term investments and prevent potential future expropriations.

Following an oil reform pushed by interim President Delcy Rodriguez earlier this year that has allowed newcomers into the country's energy sector, Woods' comments have softened. He said during the company's third-quarter earnings call that progress had been made to improve fiscal and legal terms.

"We're going to make sure that before we commit, that those are in place and we have confidence that we have a viable project that's sustainable and will generate the returns required to compete in our portfolio," he said.

"I expect that to take time. So, we're working our way through it. We're not in a rush."

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