Former US President Donald Trump has outlined a bold vision for Venezuela's crippled oil sector, suggesting that American energy giants could step in to revive it and generate significant profits. Speaking at a news conference, Trump positioned US intervention as a potential financial windfall for the Latin American nation.
The Trump Proposition: Billions for a Broken System
Trump asserted that Venezuela's oil industry would "make a lot of money" with the US behind it. He proposed that the largest US oil companies would invest billions of dollars to repair the country's badly broken oil infrastructure. "They were pumping almost nothing by comparison to what they could have been pumping," he said, describing the industry as a "total bust" for a long time.
This plan hinges on a significant transformation. Venezuela sits atop the world's largest proven oil reserves, exceeding 300 billion barrels. However, its current daily output is a mere shadow of its potential, struggling at around 1 million barrels per day, which is just about 1% of global production. Compounding the challenge, much of this oil is extra-heavy crude, which is more polluting and costly to refine.
The Daunting State of Venezuela's Oil Fields
The road to recovery is steep. While there has been some recent improvement, production remains far below the over 2 million barrels per day achieved in the early 2010s. The state-owned company, PDVSA, is crippled by a lack of capital and technical expertise.
A study by the research firm Energy Aspects details the decay: years of insufficient drilling, dilapidated infrastructure, frequent power cuts, and rampant equipment theft have left the oil fields in a dire state. This context makes any revival a complex and capital-intensive endeavour.
Chevron's Foothold and the Cost of Revival
Among Western companies, Chevron stands out as the primary player still operating in Venezuela, accounting for roughly a quarter of the country's current production. The company maintained its presence even as others left, betting on a future turnaround. About half of Chevron's Venezuelan output is exported to the United States.
Analysts caution that while greater access for US firms could theoretically help, it is not a simple fix. Richard Bronze, head of geopolitics at Energy Aspects, noted it "isn't going to be a straightforward proposition." The financial requirements are staggering. The firm estimates that boosting production by an additional 500,000 barrels per day would cost $10 billion and take two years. Truly major increases could demand "tens of billions of dollars."
While a change in Venezuela's political landscape might open doors for US investment, experts warn companies could also find themselves entangled in a messy and high-risk situation. The promise of reviving the world's biggest oil reserves comes with an equally enormous price tag and operational challenge.
