Trump Administration says that there are ways to increase Venezuelan oil production quickly
Trump's administration dismissed Tuesday analysts' estimates that it will?take years? to increase Venezuela's crude oil production. They said there are ways to boost the country?s oil sector quickly. The Trump administration is aiming to increase crude production from Venezuela, the South American country that has the largest oil reserves in the world. This comes after U.S. troops seized Venezuelan leader Nicolas Maduro during a raid against its capital Caracas, on Saturday.
A lack of investment has caused the country's infrastructure to be in ruins. The country used to export over 3,000,000 barrels a day, but now it is down to less than 1 million.
A BUSINESS OPPORTUNITY WITH 'ENORMOUS' PROSPECTS
U.S. Interior Secretary Doug Burgum stated that Washington could lift sanctions against Venezuela, which had prevented it from accessing vital oil field equipment and technologies to maximize its production.
In an interview with Fox Business Network, he said: "Some of these could be done very fast." The business opportunity is huge. A source said on Monday that the Trump administration will meet with U.S. oil executives in this week. However, it's unclear when or who they'll be meeting. Energy Secretary Chris Wright will speak on Wednesday at the Goldman Sachs Conference in Miami, right before ConocoPhillips' CEO Ryan Lance makes?closed door comments.
Trump claims that the U.S. industrial sector could expand its operations in Venezuela within 18 months, perhaps with subsidies.
Trump said on Monday that he thought "we could do it in less than a year, but the cost would be a lot more." "The oil companies will have to spend a lot of money, but we will reimburse them or they will get revenue," Trump told NBC News on Monday.
Trump stated on Tuesday, in remarks made to U.S. House Republicans, that increasing Venezuelan energy production could reduce costs for Americans.
Trump stated that "we have a lot of oil left to drill which will bring the oil prices down even more."
DISEGRATED INFRASTRUCTURE, a costly development
Oil analysts and executives are sceptical about the quick revival of Venezuela’s oil sector. They point out that it would take billions of dollars to repair its infrastructure and many years.
Venezuela's oil deposits are some of the most expensive to develop in the world because they require specialized equipment for extraction, transportation and refining into fuels.
As global oil prices are low, around $60 per barrel, producers have focused on cheaper and easier-to-develop reserves.
Daan Struyven, Goldman Sachs' co-head of global commodity research, stated at the Goldman Sachs Energy, CleanTech & Utilities Conference that it was difficult to imagine an increase beyond 300,000 to 400,000 barrels a daily in the coming year, given the state of the infrastructure, particularly the upgraders.
He said that it would be a decade before Venezuela reaches 1.5 to 2 million barrels per day, and this will likely require significant U.S. support.
He said, "I would not rule it out, but significant institutional changes will take time."
Chevron is currently the only U.S. oil major in Venezuela. Exxon Mobil, ConocoPhillips and other oil companies had long histories in Venezuela before they were nationalized nearly 20 years ago by the former president Hugo Chavez.
The Department of Energy has not responded to our request for comment. Reporting by Steve Holland in Washington; Trevor Hunnicutt in Miami; Nathan Crooks in Miami; Richard Valdmanis in writing; Rod Nickel in editing.
(source: Reuters)
