Industry experts have expressed deep doubt regarding optimistic claims that US large firms will swiftly pump tens of billions of dollars to revive Venezuela's dilapidated production facilities.
Demand for Absolute Assurances
Absent an absolute assurance of financial backing from the US federal government, analysts expect international firms to move with extreme caution.
“It seems hasty to speculate on any upcoming plans,” a representative said this weekend.
The ambitious timeframe of less than 18 months was boldly proposed. However, industry projections paint a longer timeline.
A Likely Schedule
“Chances are going to take multiple years for any kind of output increase,” commented one chief investment officer.
He suggested operators would likely spend:
- Initial phase: Sorting through new regulatory frameworks.
- The second year: Investing in rebuilding of infrastructure.
- Final phase: Starting to meaningfully increase production.
This would lead to an increase of around half a million barrels per day perhaps by 2029.
Desire Versus Readiness for Investment
Analysts draw a important separation between firms' attention and their readiness to commit substantially.
“I think their attention is an eight, on a scale of one to 10. But their willingness is a much lower, because there is no clarity yet.”
Seasoned observers in the sector share this view. The thinking is that majors will politically call it fantastic while in practice acting with extreme caution.
The Colossal Price Tag
The required outlay would be vast. Independent analysis suggest that increasing production by between 500,000 and a million bpd would require in excess of $10 billion in capital spending over two to three years.
But, rebuilding output to peak levels of around 2.5 million bpd could require a massive $80 billion to $90 billion over many more years.
The Unanswered Issue of Taxpayer Funding
The idea of energy companies being paid back by the US taxpayer has been repeatedly mentioned. Nevertheless, formal assurances on this proposal have so far not been forthcoming.
The absence of certainty is the key factor behind the industry's caution. Companies seek guarantees against political risk and the chance that a future president could cancel any promise.
“They must be insured against nationalization, that we’ve witnessed in Venezuela already.”
Therefore, while rhetorical promises runs strong, the operational realities suggest a road of measured steps for potential major financial commitment in the Venezuelan oil sector.
