Industry experts have voiced deep caution regarding recent statements that US large firms will quickly invest billions of dollars to revive Venezuela's broken energy sector.
Requirement of Absolute Assurances
Without an solid promise of full reimbursement from the Washington, experts believe international firms to move with extreme caution.
“It seems premature to comment on any potential investments,” a representative stated recently.
The aggressive schedule of less than a year and a half has been boldly outlined. Yet, realistic assessments indicate a more cautious outlook.
A More Realistic Outlook
“Chances are going to take three years for any kind of recovery in production,” said an industry expert.
Experts believe energy firms would likely spend:
- Year one: Securing new operating agreements.
- Year two: Commencing rebuilding of facilities.
- Year three: Being able to meaningfully increase yield.
This would lead to an rise of around half a million barrels per day maybe by the end of the decade.
Appetite Compared to Willingness for Risk
There is a critical difference between firms' attention and their willingness to spend heavily.
“I believe their attention is an high score, on a range of one to 10. But their readiness is a much lower, because there is significant uncertainty yet.”
Experienced operators in the country echo this caution. The expectation is that majors will publicly call it fantastic while actually acting with deliberate slowness.
The Enormous Investment Required
The required outlay would be vast. Independent analysis suggest that increasing production by between half a million and a million barrels per day would require over $10 billion in funding over several years.
But, rebuilding production to peak levels of around 2.5 million barrels per day could require a staggering $80 billion to $90 billion over many more years.
The Outstanding Question of Government Backing
The idea of energy companies being reimbursed by the federal government has been often floated. Nevertheless, concrete details on any guarantee have not yet been provided.
Without certainty is the main impediment behind the industry's hesitation. Operators seek safeguards against political risk and the chance that a different president could renege on any promise.
“They must be protected from nationalization, that we’ve experienced in Venezuela already.”
In summary, while rhetorical confidence runs strong, the financial realities suggest a path of measured steps for potential major financial commitment in the country's energy industry.