ExxonMobil has signed a preliminary agreement with Venezuela's government to evaluate potential oil investments, marking a significant step toward the American energy company's possible return nearly two decades after socialist President Hugo Chavez seized its Venezuelan assets.

The memorandum of understanding, signed Monday with the Venezuelan government and state-owned oil company Petroleos de Venezuela (PDVSA), allows ExxonMobil to examine potential drilling and development opportunities. The agreement does not identify specific oil fields or guarantee that the company will make an investment.

An ExxonMobil spokesperson described the agreement as an initial step but emphasized that the company would require substantial assurances before committing capital.

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

Venezuela possesses approximately 300 billion barrels of proven oil reserves, the largest reported reserves in the world. However, years of political instability, limited investment and deteriorating infrastructure have significantly weakened the country's ability to develop its petroleum resources and maintain production.

President Donald Trump has encouraged American energy companies to invest approximately $100 billion in revitalizing Venezuela's oil industry following the U.S. military operation that removed President Nicolas Maduro from power in January.

ExxonMobil has approached the possibility of returning cautiously. The company departed Venezuela in 2007 after Chavez's socialist government nationalized its oil assets. At a White House meeting in January, ExxonMobil CEO Darren Woods described the country as "uninvestable" without significant improvements to its legal and commercial systems.

Woods has since acknowledged Venezuela's considerable energy potential but reiterated that any future development must make economic sense for the company.

"We absolutely see a need for that resource at some point in the future," Woods said last month. "But it's going to have to be produced and developed at a very competitive cost."

The preliminary agreement follows growing interest from other American energy companies seeking opportunities in Venezuela. Chevron, which maintained operations in the country, signed a $7 billion investment agreement in September aimed at doubling production through its existing joint ventures. Continental Resources, owned by billionaire Harold Hamm, and Hunt Oil have also signed preliminary agreements to explore potential investments.

ExxonMobil's discussions could involve a substantial portion of Venezuela's oil resources. The Wall Street Journal reported in September that negotiations could include developed and undeveloped fields containing more than 50 billion barrels of oil, although the latest agreement does not specify which properties the company is evaluating.

The political environment in Washington could also influence the prospects for additional American investment. Democrats' takeover of Congress following last week's midterm elections could complicate efforts to advance the administration's Venezuela energy strategy, according to oil industry analysts.

For ExxonMobil, the memorandum represents an opportunity to assess the country's resources without making a firm financial commitment. Woods has stressed that a full return would require substantial changes to Venezuela's historical business practices and stronger protections for foreign investors.

"An actual investment is going to require some substantial changes to the way things have historically been done in Venezuela," Woods said.