To The Moon

The White House has urged major American oil companies to make substantial investments in Venezuela to repair the country's crude oil extraction infrastructure. Amid Venezuela's political instability, the United States is attempting to lead a revival of the nation's oil industry, but this presents a long-term challenge fraught with uncertainty and an estimated cost of hundreds of billions of dollars. Rebuilding Venezuela's oil infrastructure and restoring its production to peak levels is projected to require annual investments of approximately $10 billion over the next decade, with a total cost potentially exceeding $100 billion. According to Francisco Monaldi, Director of the Latin American Energy Policy program at Rice University's Baker Institute for Public Policy, Venezuela's crude infrastructure is in a state of disrepair after years of corruption, underinvestment, fires, and theft. To restore production to its 1970s peak levels, companies such as Chevron, ExxonMobil, and ConocoPhillips would need to invest around $10 billion annually for the next ten years. Lino Carrillo, a former manager at Venezuela's state-owned oil company PDVSA, emphasized that before companies can seriously consider investing, they must be convinced of the country's stability, which requires a new Congress or National Assembly, not the current state of chaos. Venezuela holds the world's largest oil reserves, but production has plummeted during the 12 years of Nicolás Maduro's presidency. Maduro was reportedly captured by U.S. forces last Saturday. The country's current daily production is approximately 1 million barrels, far below the nearly 4 million barrels produced in 1974. For investors, the task of repairing infrastructure is immense, sanctions remain in place, the U.S. Navy is blockading surrounding waters, and the path to political transition remains unclear. Infrastructure: A Comprehensive Failure from Ports to Pipelines The physical condition of Venezuela's oil supply chain is extremely poor, representing the most immediate obstacle to any revival plan. In the Orinoco Basin, a vast area estimated to hold nearly 500 billion barrels of recoverable oil, drilling rigs have been abandoned, and oil spills go unmonitored. Rigs have even been looted in broad daylight, with parts sold on the black market. The country's extensive underground pipeline network is notorious for leaks and has sometimes been dismantled by the state oil company and sold as scrap metal. Furthermore, the large Paraguana refining complex on the northwestern coast near Caracas operates intermittently and at low speeds due to equipment failures, with some of its once state-of-the-art crude upgrading facilities now shut down. Political Stalemate: The Primary Concern for Investors Although former President Trump has claimed that Venezuela's Vice President Delcy Rodriguez is currently in charge of the country, her tenure as a staunch Maduro ally has not instilled sufficient market confidence. Lino Carrillo stated bluntly in an interview, "For any oil company to take investment in Venezuela seriously, there needs to be a new Congress or National Assembly. It is certainly not the current situation." Clayton Seigle, a senior fellow at the Center for Strategic and International Studies in Washington, expects oil companies to begin updating their participation plans and proposals but does not anticipate substantial commitments until fundamental political stability emerges. Currently, Chevron is the only major U.S. oil company still operating in Venezuela, accounting for about 25% of the country's total production under a special license. The company stated in a declaration that it continues to operate in full compliance with all applicable laws and regulations, with a focus on the safety of its employees and the integrity of its assets. Beyond internal factors, the external market environment is also not conducive to large-scale capital injection. Analysts point out that ExxonMobil and ConocoPhillips, given their scale and experience, are the two U.S. companies best positioned to help rebuild Venezuela. However, both companies left after their assets were nationalized by Maduro's predecessor, Hugo Chávez, in the mid-2000s, and they still have billions of dollars in outstanding loans and compensation claims.