Trump says US companies will invest billions in Venezuelan oil production. Experts aren’t so sure | Trump administration
Industry experts expressed skepticism about Donald Trump’s bullish prediction that major U.S. oil companies would quickly invest tens of billions of dollars to repair Venezuela’s infrastructure and increase production after the handover of the country’s president, Nicolás Maduro.
Without a “firm guarantee” that the US federal government will reimburse them for the full cost of rebuilding the country’s oil market, analysts expect global energy giants to proceed with extreme caution.
The US president nevertheless insisted that the oil industry would move quickly, and boldly predicted that dominant US players could “get up and running” an expanded oil operation across Venezuela, said to be home to the world’s largest crude oil reserves, in less than 18 months.
“I think we can do it in less time than that,” Trump said. report Monday with NBC News. “But it will be a lot of money.”
In the face of such sweeping statements, US oil firms such as ExxonMobil, ConocoPhillips and Chevron (the only US oil giant still operating in Venezuela) have so far refused to publicly disclose such investment plans.
“It would be premature to speculate on future business activities or investments,” a Conoco spokesman said this weekend. Hours earlier, Trump had stated at a news conference that “our very large oil companies in the United States” are ready to “come in, spend billions of dollars, fix badly broken infrastructure, and start making money for the country.”
The ambitious timeline put forward by Trump may not be realistic. “Any production rebound will probably take three years,” said Dan Pickering, chief investment officer at Pickering Energy Partners, which expects an increase of about half a million barrels per day (bpd) by “2029, maybe late 2028.”
He suggested that energy companies will likely spend the first year sorting out new government and security contracts, spend the second year investing in restructuring, and only in the third year will they find themselves in a position to meaningfully increase their production.
Noting that the interest of multinational companies in Venezuelan oil does not fully coincide with the appetite for intense investment in a country with an uncertain future, Pickering added, “Either the US will increase the guarantees or we will spend six to 12 months watching the dust calm down.”
“I think their interest is an 8 on a scale of 1 to 10,” he said. “I think their appetite is a 4 or 5 on a scale of 1 to 10 because there is no clarity yet.”
Experienced operators in the region believe that companies will act carefully. “You’ll see them all now saying, ‘This is a great, great opportunity and we have a team ready to go to Venezuela,'” said Elliott Abrams, who served as Trump’s special envoy to Venezuela during his first term. he told Politico. “But this is policy… That doesn’t mean they will invest.”
Trump has repeatedly expressed the possibility that oil giants will be reimbursed by the federal government for their investments in Venezuela.
But the administration has yet to provide any details on whether U.S. taxpayers will support them.
According to Pickering, only the government providing a “hard guarantee” that “every dollar spent” will be refunded will allow oil companies to act more quickly.
He said they wanted to “avoid getting screwed.” “You have to protect against sovereignty risk, as we saw in Venezuela: You have to protect against renationalization. You also have to protect against a different US administration in two years and say: ‘I don’t think this is a good idea, I’m not going to pay you back.'”
The bill will be huge. Columbia University Center for Global Energy Policy estimated Adding half a million to one million barrels per day to Venezuelan oil production would require investments of more than $10 billion over two to three years, he said.
But an increase on the scale Trump and his allies are discussing is expected to require much more. The Center for Global Energy Policy said it is estimated that it would take between $80 billion and $90 billion over six or seven years to increase Venezuela’s production to the same level of 2.5 million barrels per day in the early 2010s.
Exxon, Chevron and Conoco did not respond to a request for comment on whether they were consulted before Saturday’s attack. While the president said on Sunday that his administration met with them before and after the operation in Venezuela, unnamed executives denied this claim in media reports.
According to the Wall Street Journal, Trump dropped a hint about a month before Saturday’s operation by vaguely advising the industry to “get ready.” reportedQuoting anonymous sources on the subject.
