Venezuela Oil Reserves: Donald Trump has been vowing, over and over again to make use of Venezuela’s oil reserves, proposing that the US could run the country until a stable government comes into power. The plan is to invite American oil companies to invest billions of dollars in order to revive the largely untapped resources in the nation. While ambition seems clear in this respect, experts cautions that political, legal and technical hurdles might make any meaningful production boost very well with a long term challenge.
Can the U.S. Really Take Control of Venezuela’s Oil Reserves?
The concept of U.S. control over Venezuelan oil faces numerous challenges. The present Venezuelan government, under Nicolas Maduro, is in power and handing over control to a new, U.S.-supported government will come under international observation. Even if the Venezuelan government under Maduro changes, foreign companies will not be able to invest in the Venezuelan oil industry until a secure, new government in Venezuela assures them of the same.
Will Trump’s Plan Work?
The revival of Venezuela’s oil industry would require investments running into tens of billions of dollars. It is estimated that in order to reach the former levels of production, Venezuela would take a maximum of a decade. The infrastructure is old and managed in such a way that it is in dire need of repair. Even then, there are no assurances of production or an effect on the price of oil in the international markets.
Who Has the Largest Oil Reserves?
- Venezuela: 303 billion barrels (world’s largest proven reserves)
- Saudi Arabia: 298 billion barrels
- Canada: 168 billion barrels
- Iran: 157 billion barrels
- Iraq: 145 billion barrels
Venezuela Has Huge Oil Reserves, But Now Produces a Fraction of What It Used To
Venezuela once produced over 3 million barrels per day, a global heavyweight in the production of oil. Today, production has dropped to approximately 860,000 barrels per day, less than 1% of total world consumption. Years of gross mismanagement, active brain drain and decay have left the country incapable of efficiently exploiting its vast reserves.
Venezuela Owes Some U.S. Oil Companies Billions
Venezuela’s historical disputes with international oil firms have left substantial debts. ConocoPhillips was awarded over $10 billion in arbitration and ExxonMobil over $1 billion, though Venezuela has only paid a fraction. Chevron remains active but under strict U.S. licenses, managing roughly a fifth of the country’s current oil production.
Will U.S. Oil Companies Return?
The posibility of returning to the U.S. is dependent on political security and the ability to repatriate unpaid debt. Venezuela is labeled a “brownfield,” as it means that companies know what to expect regarding their drilling efforts. Returning to Venezuela for companies such as ConocoPhillips could mean financial redemption as well as future exploitation of the world’s largest oil reserves.
