Industry experts have expressed significant skepticism regarding bullish claims that American energy majors will swiftly pump tens of billions of dollars to fix Venezuela's dilapidated energy sector.
Demand for Iron-Clad Assurances
Absent an solid promise of complete repayment from the American government, specialists predict global energy giants to proceed with extreme caution.
“It would be hasty to discuss any upcoming plans,” a representative stated in response.
The ambitious timeframe of less than a year and a half was boldly proposed. Yet, expert analyses indicate a more cautious outlook.
A Probable Schedule
“It’s probably going to take 36 months for any kind of output increase,” commented an chief investment officer.
He suggested oil companies would likely spend:
- Initial phase: Securing new government and security contracts.
- The second year: Commencing reconstruction of equipment.
- The third year: Starting to boost output.
This would lead to an rise of around 500,000 barrels per day possibly by the end of the decade.
Appetite Compared to Appetite for Investment
Experts make a critical difference between multinationals’ interest and their appetite to invest substantially.
“I believe their interest is an high score, on a scale of one to 10. I think their appetite is a much lower, because there is a lack of certainty yet.”
Veteran diplomats in the country echo this caution. They believe that companies will publicly call it fantastic while privately acting with extreme caution.
The Vast Price Tag
The monetary outlay would be vast. Independent analysis suggest that increasing production by between 500,000 and a million barrels per day would require over $10 billion in investment over two to three years.
Yet, returning production to historical levels of around 2.5 million barrels per day could require a staggering $80 billion to $90 billion over many more years.
The Unanswered Question of Government Backing
The suggestion of firms being compensated by the US taxpayer has been repeatedly mentioned. But, concrete details on such a mechanism have so far not been announced.
This lack of clarity is the key impediment behind the industry's reluctance. Companies seek protection against political risk and the risk that a subsequent administration could refuse any deal.
“They must be protected from nationalization, that we’ve experienced in Venezuela before.”
Therefore, while rhetorical promises runs strong, the practical risks suggest a journey of extreme caution for potential large-scale financial commitment in the Venezuelan oil sector.
