Unseating the country’s president and establishing more pliant leadership within Venezuela marks only the opening move in what is shaping up to be America’s most audacious energy gambit in decades—attempting to harness the country’s vast resource wealth in the face of capital constraints and a web of infrastructural and political hurdles.
If there were any pretense that the capture of Nicolás Maduro was driven purely by his involvement in “narcoterrorism” against the U.S., President Donald Trump dispelled this during Saturday’s press conference, shortly after what he called the “extraordinary military operation.”
“Oil” received its first mention a few minutes into Trump’s speech, and six more over the course of the 20-minute address as he discussed the nighttime raid, its precursors and his administration’s still-vague plans to “run” the country following Maduro’s ouster.
“We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” the president said.
He reiterated his confidence aboard Air Force One on Sunday, telling reporters he had spoken with U.S. firms “before and after” the operation, and that Venezuela would soon see “big investments by the oil companies to bring back the infrastructure.”
Venezuela’s ‘Untapped’ Bounty
Even prior to any commitments from America’s oil majors, Trump has already stated that the country will be “turning over” up to 50 million barrels—worth over $2 billion—to the U.S., the proceeds from which he said would be used to benefit the citizens of both countries.
But it would cost an estimated $183 billion to rebuild Venezuela’s dilapidated energy sector in the manner Trump envisions, according to Rystad Energy, and despite his assurance that companies are rearing to go—”they want to go in so badly,” he said Sunday—America’s oil giants have so far been coy with their intentions to pounce on the black gold underneath Venezuela.
Chevron, the only American firm currently operating in the country, told Newsweek its current focus is “the safety and wellbeing of our employees, as well as the integrity of our assets.” ConocoPhillips, more openly, said it was “monitoring developments in Venezuela and their potential implications for global energy supply and stability,” but said “it would be premature to speculate on any future business activities or investments.”
While the security risks associated with doing business in the country are currently as pronounced as the financial toll of doing so, Trump told NBC News that companies involved could be reimbursed by the government for the “tremendous amount of money” required to restore Venezuela’s oil sector.
And beyond taxpayer-funded inducements, Venezuela—home to the largest proven reserves on the planet and situated only few thousand kilometers from the hungriest oil market on the planet—offers American companies a staggering reward if they help to unlock its natural resource endowment.
“U.S. oil companies, particularly those with a long history of operating in Venezuela, stand to benefit from access to the country’s substantial and largely untapped oil reserves,” according to energy economist and policy advisor Carole Nakhle.
Nakhle, founder of the energy consultancy and research firm Crystol Energy, told Newsweek that companies like Chevron, with contemporary knowledge of Venezuela’s oil fields, would be able to swiftly boost their operations in the country. Similarly, ExxonMobil and ConocoPhillips, who left the country in 2007, still retain sufficient knowledge of the geological, infrastructural and operational hurdles that would need to be overcome to tap Venezuela’s largely dormant oil bounty.
Claudio Galimberti, chief economist at Rystad Energy, said securing this “big prize” would be a long-term endeavor, but a rewarding one, given that the global oil supply and demand balance “will be in deficit already in the 2030s and 2040s under many scenarios.”
“Even though we will likely go through an oversupply phase in the second 2-4 quarters with low oil prices, in the long run, it makes sense to push for the development of Venezuela’s reserves,” he told Newsweek.
ConocoPhillips and Exxon will also be eager to recoup the billions of dollars in debts owed by Venezuela and stemming from the 2007 nationalization of oil projects under President Hugo Chávez, which prompted them to exit the country and file international arbitration claims.
And potential beneficiaries extend beyond the oil majors themselves, with ancillary companies involved who provide equipment and services for extraction, such as Halliburton, Baker Hughes, and Valero Energy, also poised to profit from increased access to Venezuela’s resources.
“I have owned Valero since 2020,” wrote “Big Short” investor Michael Burry in a Monday blog post, “and I am more resolved to holding it even longer after this weekend.”
The Hurdles for US Oil Companies
Yet realizing these benefits will encounter numerous challenges.
“Significant capital will be needed to modernize outdated infrastructure, mitigate environmental concerns related to the country’s high-carbon heavy crude, and navigate the political and regulatory uncertainty that continues to surround the country,” said Nakhle.
“Venezuela offers the scale major producers need, but the fundamentals work against rapid deployment,” Alan Gelder, senior vice president of Refining, Chemicals & Oil Markets at Wood Mackenzie, wrote in a press note on Tuesday. “Heavy crude economics at current prices, unresolved legal claims, and political uncertainty create a risk profile that extends well beyond typical above-ground challenges.”
Galimberti described Venezuela’s current infrastructure as being in “a horrific state after decades of mismanagement, underinvestment, and flight of know-how.” However, he said the required investments to fix this will encounter a “chicken and the egg problem”—New projects will be costly and yield unattractive returns in the current price environment, making firms reluctant to commit capital, yet capital is what will be needed to rebuild infrastructure and boost output.
“The new government will need to ensure law and order are reestablished and that it’s safe for foreign engineers and managers to work in the country,” he added. “The divestments by many [international oil companies] from places like sub-Saharan Africa over the past decade shows that law and order are critical conditions to be met for IOCs to operate in a country.”
Trump officials are already lining up meetings with energy CEOs on Venezuela’s future, sources told Reuters and Politico, to hash out the costs and benefits of what would need to be a breakneck push to get these companies “up and running” within the 18-month timeframe he has envisioned.
Galimberti said Rystad had “not yet” been consulted by the administration on a potential Venezuela venture, and, when asked whether the firm was willing to be involved, added only, “It depends.”
“It is clear that growing curiosity exists across various sectors, not just oil, as the political and economic landscape shifts,” said Nakhle. “It will be interesting to see how this evolves over time.”
And despite the hurdles and costs associated with private involvement in Venezuela’s energy reconstruction, Trump made America’s broad intentions known in a phone call with MS NOW’s Joe Scarborough on Monday, telling the Morning Joe host: “We’re going to keep the oil.”
