Rogé Karma writes:

So, about all that Venezuelan oil. Although President Trump has declared that America’s oil companies will soon “go in” to Venezuela and “spend billions of dollars” to rebuild that country’s petroleum industry, the administration is making two huge assumptions. First, that unleashing Venezuelan oil would yield lower energy prices for American consumers and giant profits for American companies. Second, that unlike previous administrations, which got bogged down for decades in failed nation building in Iraq and Afghanistan, Trump can simply let great American companies do what they do best—drill, baby, drill.

But my conversations with several oil-industry veterans and energy analysts indicate that the administration has the situation precisely backwards: Restoring Venezuela’s oil industry is completely unrealistic in the short term, and might not be in America’s economic and geopolitical interests at all. “Trump seems locked in the world of the 1980s and ’90s, when the U.S. imported most of its oil from a handful of foreign sources,” Arnab Datta, a lawyer who specializes in energy markets, told me. “But today, America is the world’s biggest oil producer. The play for Venezuelan oil doesn’t make a whole lot of sense for the new world we’re in.”

Although some oil executives who met with Trump at the White House yesterday expressed a vague interest in doing business in Venezuela, Exxon Mobil CEO Darren Woods offered a blunt warning about the country. “Today,” he said, “it’s uninvestable.”

The Trump administration is right about one thing: Venezuela has a lot of oil. As recently as the ’90s, it was one of the world’s top producers, pumping out more than 3 million barrels a day. But in the early 2000s, the populist leader Hugo Chávez forced out most Western oil companies, seized their assets, and turned their operations over to the country’s dysfunctional state-owned company. Production has since plunged by more than two-thirds. In this history, the Trump administration sees a golden opportunity. With Maduro, Chávez’s hand-picked successor, out of power, U.S. companies can return and bring hundreds of millions of barrels of new supply to the global market.

Yet expert after expert told me that rebooting the country’s oil industry would require a herculean effort. It would involve training an army of workers with no experience in the industry, rebuilding decrepit processing facilities and miles of crumbling pipelines, and amassing a private security force to protect these investments from cartels and private militias. “I really can’t overstate just how hard this would be to actually pull off,” Ben Nussdorf, who served as a senior adviser for the Department of Energy’s Office of Oil and Natural Gas from 2014 to 2021, told me. “Don’t even think about making a dollar for at least a decade.” According to the most optimistic projections, simply restoring Venezuela’s production to its previous peak would require a decade and $100 billion of investment; more conservative estimates put the numbers closer to 15 years and $200 billion. [Continue reading…]