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Trump pushes for Venezuelan oil revival amid skepticism
US President Donald Trump has signaled plans to visit Venezuela following the recent seizure of President Nicolás Maduro, aiming to unlock the country's vast oil reserves-officially the world's largest. However, American energy companies remain hesitant about investing in the crisis-stricken nation.
US energy delegation assesses Venezuela's oil sector
Trump's announcement came after US Energy Secretary Chris Wright concluded a two-day trip to Venezuela last week to evaluate the reopening of its oil industry to foreign firms. The visit followed a new law passed by Venezuela's National Assembly permitting private and international investment in its energy sector, reversing two decades of strict state control.
Trump framed the move as a major economic opportunity for the US. "We're going to extract oil volumes few have ever seen," he declared at a January White House meeting with energy executives. Yet analysts question whether the numbers justify the risks.
Venezuela's oil infrastructure in disrepair
Venezuela's state-owned oil company, PDVSA, has suffered severe decline under Maduro and his predecessor, Hugo Chávez. Funds were diverted to social programs rather than maintenance, causing production to plummet from 3.5 million barrels per day 15 years ago to roughly 700,000 today. US sanctions have exacerbated the crisis, though their potential easing could offer some relief.
William Jackson, chief emerging markets economist at Capital Economics, noted the country's aging equipment. "Venezuela's infrastructure has deteriorated after years of neglect," he said. "Rebuilding will require massive investment."
"A lot of the existing infrastructure must be scrapped entirely,"
Monica de Bolle, Peterson Institute for International Economics
De Bolle, a senior fellow at the Peterson Institute, added that PDVSA's symbolic importance to Venezuelan sovereignty complicates any US-led overhaul. "Would Venezuela fully comply with US demands? Unlikely," she told the BBC.
Financial and political hurdles for US investors
Trump has urged US oil firms to commit at least $100 billion to restore Venezuela's oil infrastructure, a prerequisite for scaling up production. Yet the country's economic collapse-marked by an exodus of nearly eight million people, including skilled oil workers-poses significant challenges.
Thomas Watters of S&P Global Ratings emphasized that profitability remains the bottom line. "Oil companies must deliver shareholder value," he said. "Without a viable oil price, revival efforts will struggle."
Historical grievances further dampen enthusiasm. In 2007, ExxonMobil and ConocoPhillips had assets seized after refusing PDVSA's demand for majority control. Though international courts awarded them billions in damages, Venezuela has yet to pay.
Uncertainty over reserves and global oil prices
Venezuela claims 300 billion barrels in reserves, but doubts persist. Under Chávez, the figure quadrupled after reclassifying previously uneconomical deposits as viable due to high oil prices. With prices now around $65 per barrel, the same calculations may not hold.
Jackson cautioned that the true scale of recoverable reserves remains unclear. "The situation is fluid and opaque," he said. "Geopolitical factors add another layer of complexity."
Even if production surges, analysts downplay the risk to Canada's heavy oil exports to the US. Capital Economics research suggests Canadian oil will remain competitively priced.
Trump's approach lacks incentives, critics say
Trump's strategy offers no security guarantees for US firms operating in Venezuela, where state-backed "colectivos" often engage in criminal activity. Without government incentives, companies like ExxonMobil-whose CEO called Venezuela "uninvestable"-are unlikely to take the plunge.
De Bolle criticized Trump's "all stick, no carrot" policy. "They seem to believe Venezuela's resources are theirs for the taking," she said. "But the private sector isn't budging-and for good reason."
