There are other obstacles. The oil in Venezuela is a heavy form of crude that is more difficult to process and carries a heavier carbon footprint than oil pumped elsewhere. Venezuela’s power grid is on the brink, creating an uncertain outlook for oil production, which requires massive amounts of energy. Also, Russian and Chinese firms partnered with Venezuela after US companies left the nation, complicating the re-establishment of US firms.
Returning to Venezuela has hardly been a central talking point of US oil companies.
In this era of relatively low oil prices and uncertainty about how robust future demand will be amid an on-again, off-again global energy transition from fossil fuels, firms are anxious about reinvesting tens of billions of dollars more in pumping in Venezuela absent assurances that their investments would be secure for at least a decade, industry analysts say.
Trump’s removal of Venezuela’s leader and plan to put the US in charge of the country for now does not ensure that, despite his sweeping promises.
“We built Venezuela’s oil industry with American talent, drive and skill, and the socialist regime stole it from us,” Trump said. “The oil companies are going to go in. They’re going to spend money there that we’re going to take back the oil that, frankly, we should have taken back a long time ago. A lot of money is coming out of the ground. We’re going to get reimbursed for all of that. We’re going to get reimbursed for everything that we spend.”
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Today, the nation’s oil production is a fraction of what it could be, and its infrastructure is badly frayed because of domestic turmoil, the departure of foreign oil companies and related international sanctions. The nation is pumping a mere 1 million barrels of oil a day, less than 1 per cent of global output. That is also less than a third of its peak production under the Hugo Chávez regime and a quarter of what experts say it is capable of generating.
That oil has largely been purchased by China.
The only American company operating in Venezuela is Chevron, with its production constrained by considerable Venezuelan government restrictions.
“Chevron remains focused on the safety and wellbeing of our employees, as well as the integrity of our assets,” a statement from company spokesman Bill Turenne said. “We continue to operate in full compliance with all relevant laws and regulations.”
While acknowledging that firms have reason to be reticent, Monaldi, of Rice University, pointed to forecasts showing that Venezuelan oil could be crucial to meet rising global demand over the next decade.
But none of this can happen overnight.
Oil companies have been reluctant even to increase their rig counts in the US.Credit: AP
“Oil companies do not operate in a vacuum, and we are years from significant volume increase,” said Pedro Burelli, a critic of Venezuelan President Nicolás Maduro now living in the United States, and a former board member of the Venezuelan state oil company. “Regulations and contracts matter as US oil companies are publicly traded companies with shareholders who will demand rational investment decisions.”
Oil companies have even been reluctant to increase their rig counts here, despite Trump’s repeated calls for more drilling, amid demand uncertainty and dropping market prices. US oil production soared during the Biden administration, but the pace of growth has slowed since Trump returned to office, with some forecasts predicting declines this year.
Kevin Book, managing director at the ClearView Energy Partners research firm, said oil companies will be looking to sign contracts that they are confident will be honoured for the long term, and there is no government in Venezuela right now that can honour such a contract.
“Before you make all these big investments and start running operations, you also need a stable country with reliable electricity, functioning ports and an available workforce,” he said. “A lot of factors go into pulling this off.”
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