U.S. Oil Strategy in Venezuela Faces Risks and Delays

A push by the United States to reintegrate oil companies into Venezuela is unlikely to yield swift results and poses significant risks for investors, according to petroleum analyst Matt McClain of GasBuddy. This statement comes in light of efforts by President Donald Trump to attract American firms back into the country’s oil sector.

In an interview with CTV News Channel, McClain questioned whether oil companies would be willing to invest in Venezuela, given the history of state seizures of assets. “At this particular point, will the crude oil companies say, ‘Yes, we really do want to get back into Venezuela and invest?’” he asked. Previous experiences of companies like ExxonMobil, which had assets seized on two separate occasions, have created a climate of caution among potential investors.

Despite Trump’s recent calls for oil executives to return to Venezuela, framing it as an economic opportunity that could help stabilize U.S. gasoline prices, executives express significant hesitance. McClain noted that the Venezuelan environment is currently perceived as “un-investable,” primarily due to weak legal protections and an unstable commercial framework.

Concerns Over Investment Viability

ExxonMobil emphasized that any decision to proceed would involve sending assessment teams to evaluate the situation. McClain explained that even conducting an assessment would be a lengthy process. “It will take a lot of time just to simply do an assessment,” he said, referencing the country’s vast oil infrastructure and the challenges it presents.

The timeline for potential investment remains uncertain. McClain estimated that substantial operations could not begin before the latter half of 2027, assuming the process starts immediately. He indicated that the likelihood of returning to substantial production levels is low before 2026.

The backdrop to these discussions includes a military operation on January 3, 2023, which resulted in the capture of former Venezuelan leader Nicolás Maduro. Following this event, the U.S. has seized tankers linked to Venezuelan oil and announced plans to oversee the global sale of tens of millions of barrels indefinitely.

Long-Term Production Challenges

Despite these efforts, Venezuela’s oil output has dwindled to below one million barrels per day. U.S. Energy Secretary Chris Wright stated that it could take eight to twelve years for production to return to three million barrels per day, even with sustained investment.

McClain pointed out that the current U.S. administration appears more focused on ensuring that Venezuelan oil is sold through American channels, rather than on who the ultimate buyers are. “The key of the matter is the United States, according to the Trump administration, is open for business when it comes to Venezuela and selling its oil,” he said.

The situation remains complex, as potential investors weigh the risks against the long-term opportunities in a country known for its vast oil reserves but fraught with instability.