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How much oil investment would that take?

Trump on Truth Social

Truth Social Link: I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America. This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States! I have asked Energy Secretary Chris Wright to execute this plan, immediately. It will be taken by storage ships, and brought directly to unloading docks in the United States. Thank you for your attention to this matter!

DONALD J. TRUMP
PRESIDENT OF THE UNITED STATES OF AMERICA

Yes, I am paying attention.

Please note Big Oil doesn’t share Trump’s dream of making Venezuelan oil great again

Trump has expressed excitement over the prospect of US oil companies getting their hands on Venezuela’s vast oil resources.

But industry sources tell CNN that American oil executives are unlikely to dive headfirst into Venezuela for multiple reasons: The situation on the ground remains very uncertain, Venezuela’s oil industry is in shambles and Caracas has a history of seizing US oil assets.

Perhaps the biggest problem is that oil prices are too low today to justify spending the gobs of money – possibly tens of billions of dollars – that would be required to revive Venezuela’s decaying oil industry.

“The appetite for jumping into Venezuela right now is pretty low. We have no idea what the government there will look like,” one well-placed industry source told CNN on Monday. “The president’s desire is different than the industry’s. And the White House would have known that if they had communicated with the industry prior to the operation on Saturday.”

Venezuela has more proven oil reserves than any country on the planet, more than Iraq, Russia and the United States combined, according to federal estimates.

Yet when oil companies decide to invest in far-flung drilling projects, they need confidence about what the operating environment there will look like years, if not decades, into the future. These days it’s hard to feel solid about Venezuela’s form of government and institutions weeks from now, let alone years.

“Just because there are oil reserves – even the largest in the world – doesn’t mean you’re necessarily going to produce there,” another industry source told CNN. “This isn’t like standing up a food truck operation.”

“Venezuela is broke. It doesn’t have any money. The national oil company is in disarray. It can barely feed its people,” said Luisa Palacios, a former Citgo chairwoman who was born and raised in Venezuela.

Just to keep Venezuela’s oil production flat at 1.1 million barrels per day – roughly equal to what North Dakota currently produces – would require about $53 billion of investment over the next 15 years, according to estimates published Monday by consulting firm Rystad Energy.

However, to return Venezuela to its glory days of 3 million barrels per day from the late 1990s, total oil and gas capital spending would need to reach a staggering $183 billion through 2040, according to Rystad’s analysis.

That huge figure reflects not only Venezuela’s aging infrastructure but the fact that most of its oil is considered “heavy,” a blend of crude that is harder and more expensive to refine and process than the lighter oil found in the Permian Basin of West Texas.

$60 oil won’t inspire investment

Crude is also cheap right now. Oil prices plunged by 20% last year – their worst since 2020.

Cheap oil is great for consumers, driving down gasoline prices to four-year lows. However, that same low-price environment makes oil CEOs, and their shareholders, reluctant to gamble on risky projects.

“The idea that there will be an overnight restart of the Venezuelan oil industry is just unrealistic. It’s all very premature,” said Doug Leggate, Wolfe Research’s managing director of integrated oil, refiners and exploration & production.

Chevron currently produces about 150,000 barrels per day in Venezuela, according to Rystad, operating under a sanctions license the Trump administration recently extended.

Chevron declined to answer questions about its level of interest in ramping up production in Venezuela now that President Nicolás Maduro has been removed from power.

Exxon is focused on developing blockbuster oil discoveries in nearby Guyana, which in the span of a few years has gone from almost no oil production to surpassing that of Venezuela.

“Venezuela is not the only game in town – not even in Latin America,” Palacios said.

Trump Pushes Oil Companies

Reuters reports US pushes oil majors to invest big in Venezuela if they want to recover debts

White House and State Department officials have told U.S. oil executives in recent weeks that they would need to return to Venezuela quickly and invest significant capital in the country to revive the damaged oil industry if they wanted compensation for assets expropriated by Venezuela two decades ago, according to two people familiar with the outreach.

In the 2000s, Venezuela expropriated the assets of some international oil companies that declined to give state-run oil company PDVSA increased operational control, as demanded by late Venezuelan President Hugo Chavez.

President Donald Trump said on Saturday that American companies were prepared to return to Venezuela and spend to reactivate the struggling oil sector, just hours after President Nicolás Maduro was captured and removed by U.S. forces.

In the recent U.S. administration discussions with oil executives in the scenario that Maduro was out of power, officials have said that U.S. oil companies would need to front the investment money themselves to rebuild Venezuela’s oil industry. That would be one of the preconditions for them eventually recovering debts from the expropriations.

That would be a costly investment for firms such as ConocoPhillips, the sources said. Conoco for years has tried to recover some $12 billion from the Chavez-era nationalization of its Venezuela assets. Exxon Mobil also filed international arbitration cases, trying to recover $1.65 billion.

“ConocoPhillips is monitoring developments in Venezuela and their potential implications for global energy supply and stability. It would be premature to speculate on any future business activities or investments,” a company spokesperson said in emailed comments to Reuters on Saturday. The company reiterated the statement on Sunday when asked about discussions with administration officials for this story.

Premature Silliness

This is all premature silliness until Trump proves his administration can run Venezuela as promised.

And it’s not like the oil is high quality as Trump claims. Indeed it’s low quality that is both hard to extract and hard to refine.

For discussion of oil quality and refining issues, please see How Long Will it Take to Ramp Up Production of Venezuelan Oil?

Here are responses from AI, the WSJ, and an energy investor who posts on my blog.

For discussion of logistcs and running the country, please see What Are the Odds that the US Can Successfully Run Venezuela?

History is not kind to the idea. Nonetheless, let’s investigate a current take.

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