U.S. Oil Companies not Buying Trump’s Hype about Venezuela Investments

President Donald Trump says American oil companies “want to go in so badly” to Venezuela and spend billions of dollars, but U.S. producers remain hesitant, and rebuilding the country’s battered oil sector would take many years and tens of billions of dollars, Jordan Blum reported for Fortune.

Critics said Trump’s penchant for headlines and political theatrics cannot dictate investment decisions by major oil companies. (Photo: ExxonMobil Facebook) 

More than doubling Venezuela’s current oil production would likely take until 2030 and cost roughly $110 billion, according to research firm Rystad Energy.

Restoring production to past peak levels would take even longer. Venezuela currently produces about 900,000 barrels of oil per day — roughly one-third of its output at the turn of the century — due to years of mismanagement, labor strikes, sanctions, and financial distress.

“We’re not waving a magic wand here and all of a sudden more oil starts flowing out of Venezuela,” said Dan Pickering, founder and chief investment officer of Pickering Energy Partners.

“You’re not going to bully Exxon [Mobil] and Chevron into spending a bunch of money in a risky spot.”

“Trump says, ‘Drill, baby, drill,’ and the industry didn’t listen,” Pickering added. “They’re not going to blindly deploy capital because Trump says they should.”

Oil prices remain relatively low — rising less than 2% on Jan. 5 — as global markets are already well supplied, making risky foreign investments harder to justify. “All of the excitement and hype surrounding Venezuela’s future really deserves a reality check,” said Matt Reed, vice president at geopolitical and energy consultancy Foreign Reports.

“The hype and the reality are very far apart.”

“If you’re talking about rebuilding Venezuela,” Reed said, “you’re talking about bringing in oil companies that need real certainty. They need the situation to stabilize, and they need confidence that it will stay stable if they’re going to take the risk and invest. At this point, no one is going to rush in.”

Critics said Trump’s penchant for headlines and political theatrics cannot dictate investment decisions by major oil companies.