As the Trump administration touts the prospect of American oil companies investing billions to revive Venezuela’s oil production, industry experts have expressed skepticism over the feasibility and timeline of such ambitious plans.
President Trump has boldly claimed that major US players could get expanded oil operations “up and running” across Venezuela, home to the world’s largest crude oil reserves, in less than 18 months. However, without an “iron-clad guarantee” of government reimbursement for the costs of rebuilding the country’s dilapidated oil infrastructure, analysts expect global energy giants to proceed with extreme caution.
“It would be premature to speculate on any future business activities or investments,” a ConocoPhillips spokesperson said this weekend, hours after Trump stated that “our very large United States oil companies” were poised to “go in, spend billions of dollars, fix the badly broken infrastructure and start making money for the country.”
Dan Pickering, chief investment officer at Pickering Energy Partners, believes it will likely take three years for any meaningful production increase, with the first year spent sorting through new government and security contracts, and the second year invested in reconstruction. Only in the third year, he suggests, would firms be in a position to significantly boost output.
“Either the US is going to step up with guarantees, or we’re going to spend six to 12 months watching the dust settle,” Pickering added, noting that multinational interest in Venezuelan oil does not necessarily correspond with their appetite to invest heavily in a country with an uncertain future.
Elliott Abrams, who served as Trump’s special envoy to Venezuela during his first term, expects oil companies to tread carefully, saying, “That’s politics … That doesn’t mean they’re going to invest.”
The potential price tag for reviving Venezuelan oil production is staggering. Columbia University’s Center on Global Energy Policy estimated that adding between 500,000 and 1 million barrels per day would require more than $10 billion in investment over two to three years. Reaching the country’s pre-crisis output levels of 2.5 million barrels per day could cost between $80 billion and $90 billion over six or seven years.
As the Trump administration continues to tout the prospect of American oil firms rushing to invest in Venezuela, industry insiders remain cautious, prioritising protection from sovereign risk and a potential change in US policy over the long-term potential of the country’s vast oil reserves.