Industry experts have expressed significant caution regarding optimistic claims that American oil giants will quickly pump tens of billions of dollars to rebuild Venezuela's crumbling oil infrastructure.
Requirement of Absolute Assurances
Absent an absolute assurance of full reimbursement from the Washington, experts believe global energy giants to proceed with great care.
“It is premature to discuss any future business activities,” an official stated in response.
The ambitious timeline of less than a year and a half was publicly proposed. Yet, realistic assessments indicate a more cautious outlook.
A Probable Schedule
“It is likely going to take 36 months for any kind of output increase,” said one industry expert.
He suggested oil companies would likely spend:
- Year one: Sorting through new government and security contracts.
- Year two: Investing in reconstruction of facilities.
- The third year: Being able to significantly ramp up yield.
This suggests an increase of around half a million barrels per day maybe by the end of the decade.
Desire Versus Readiness for Investment
Experts make a critical difference between multinationals’ interest and their willingness to spend significantly.
“In my view their interest is an eight, on a range of ten. I think their willingness is a four or five, because there is significant uncertainty yet.”
Veteran observers in the country echo this sentiment. The thinking is that majors will publicly call it fantastic while actually acting with great care.
The Vast Investment Required
The required bill would be vast. Research analysis suggest that increasing production by between 500,000 and a million barrels per day would require in excess of $10 billion in capital spending over several years.
However, rebuilding production to previous levels of around 2.5 million bpd could require a staggering $80 billion to $90 billion over six or seven years.
The Pending Question of Taxpayer Funding
The prospect of energy companies being paid back by the government has been repeatedly mentioned. Nevertheless, formal assurances on this proposal have not yet been announced.
The absence of a solid plan is the key factor behind the industry's reluctance. Companies seek protection against sovereign risk and the chance that a future president could cancel any deal.
“They must be insured against nationalization, that we’ve experienced in Venezuela previously.”
Ultimately, while rhetorical optimism runs high, the practical realities suggest a path of measured steps for potential major financial commitment in the Venezuelan oil sector.
