Energy analysts have voiced deep doubt regarding optimistic claims that American large firms will rapidly pump vast sums of dollars to fix the country's broken oil infrastructure.
Requirement of Solid Protections
Absent an solid promise of financial backing from the US federal government, experts believe multinational oil companies to move with extreme caution.
“It seems premature to comment on any future business activities,” a representative said in response.
The aggressive timeline of under 18 months has been publicly proposed. Yet, realistic assessments paint a more cautious outlook.
A More Realistic Schedule
“Chances are going to take 36 months for any kind of output increase,” said an industry expert.
He suggested oil companies would likely spend:
- Initial phase: Sorting through new government and security contracts.
- Year two: Investing in overhaul of facilities.
- Final phase: Being able to meaningfully increase output.
The result could be an rise of around 500,000 barrels per day maybe by the end of the decade.
Interest vs. Readiness for Risk
Analysts draw a important separation between companies' curiosity and their willingness to spend heavily.
“I think their interest is an eight, on a scale of ten. I think their appetite is a four or five, because there is significant uncertainty yet.”
Veteran diplomats in the sector share this view. They believe that firms will politically express enthusiasm while in practice acting with extreme caution.
The Colossal Cost
The monetary investment would be vast. Independent analysis suggest that adding between 500,000 and a million barrels per day would require in excess of $10 billion in funding over two to three years.
But, returning output to previous levels of around 2.5 million bpd could require a monumental $80 billion to $90 billion over many more years.
The Unanswered Question of Taxpayer Funding
The suggestion of firms being reimbursed by the federal government has been often raised. Nevertheless, formal assurances on this proposal have not yet been provided.
This lack of a solid plan is the main impediment for the industry's hesitation. Firms seek safeguards against nationalization and the risk that a different president could cancel any deal.
“You need to be shielded from political change, that we’ve seen in Venezuela previously.”
In summary, while political promises runs high, the practical challenges suggest a path of measured steps for potential major investment in the Venezuelan energy industry.