Trump Revives Venezuela's Oil Industry - A $100 Billion Gamble

According to Xinhua News Agency, the White House has requested major U.S. oil companies to invest heavily in Venezuela to repair its crude oil extraction infrastructure. Amidst the political turmoil in Venezuela, the U.S. is attempting to lead the revival of the country's oil industry, but this will be a long-term challenge costing hundreds of billions of dollars and fraught with uncertainty. Rebuilding Venezuela's oil infrastructure and restoring its production to peak levels is expected to require an annual investment of about $10 billion over the next decade, with total costs potentially exceeding $100 billion. Francisco Monaldi, director of Latin American energy policy at the Baker Institute for Public Policy at Rice University, pointed out that after years of corruption, underinvestment, fires, and theft, Venezuela's crude oil infrastructure is in tatters. To restore production to the peak levels of the 1970s, companies like Chevron, ExxonMobil, and ConocoPhillips will need to invest about $10 billion annually over the next decade. Former Venezuelan National Oil Company manager Lino Carrillo emphasized that companies must be assured of stability in the country before seriously considering investment, which requires a new Congress or National Assembly, rather than the current chaotic state. Venezuela boasts the world's largest oil reserves, but production has plummeted during Maduro's 12 years in power. According to CCTV News, Maduro was captured by U.S. military last Saturday. Currently, the country's daily production is about 1 million barrels, far below nearly 4 million barrels in 1974. For investors, the scale of infrastructure repair is enormous, and existing sanctions remain in place, with the U.S. Navy blocking surrounding waters, and the political transition path remains unclear. Infrastructure: A Comprehensive Collapse from Ports to Pipelines The physical condition of Venezuela's oil supply chain is extremely poor, which is the most direct obstacle facing the revival plan. In the Orinoco Basin, a vast area estimated to contain nearly 500 billion barrels of recoverable oil, drilling platforms have been abandoned, and crude oil leaks go unchecked. Drilling platforms have even been looted in broad daylight, with parts sold on the black market. The country's vast underground pipeline network is notorious for leaks and has sometimes been dismantled by the national oil company to be sold as scrap metal. Additionally, the large Paraguana refining center located on the northwestern coast of Caracas can only operate intermittently at low speeds due to equipment failures, and some of the once state-of-the-art crude upgrading facilities have been shut down. Political Stalemate: The Primary Concern for Investors Despite Trump's claim that Venezuelan Vice President Delcy Rodriguez is currently in charge of the country's affairs, her position as a staunch ally of Maduro has not instilled enough confidence in the market. Lino Carrillo bluntly stated in an interview, "Any oil company that takes investment in Venezuela seriously needs a new Congress or National Assembly. That is certainly not the case right now." Clayton Seigle, a senior fellow at the Center for Strategic and International Studies in Washington, indicated that oil companies are expected to begin updating their participation plans and proposals, but no substantial commitments will be made until there is basic political stability. Currently, Chevron is the only major U.S. oil company still operating in Venezuela, accounting for about 25% of the country's total production and operating under special licenses. The company stated in a release that it will continue to fully comply with all relevant laws and regulations, focusing on employee safety and asset integrity. In addition to internal factors, the external market environment is also not conducive to large-scale capital injection. Analysts point out that ExxonMobil and ConocoPhillips, with their scale and experience, are the two U.S. companies most capable of helping to rebuild Venezuela. However, both companies withdrew after their assets were nationalized by Maduro's predecessor, Chavez, in the mid-2000s, and still have billions of dollars in unpaid loans and compensation claims