API: Reviving Venezuela's Oil Sector Will Be Long, Multi-Billion Dollar Process
- Oil industry executives have voiced that reviving Venezuela's oil production will be a long and costly process.
- Companies will need stable, legally defined frameworks, security for investments, and clear commercial terms before committing major capital.
- Rystad Energy recently estimated that restoring Venezuela's oil production to its previous peak of 3 million barrels per day (bpd) would require a total investment of $183 billion over 15 years.
American Petroleum Institute (API) CEO, Mike Sommers, alongside other industry leaders like TotalEnergies' (NYSE:TTE) Patrick Pouyanne, have warned that reviving Venezuela's oil industry will be a long, costly, multi-billion dollar process requiring clear legal frameworks, strong investment security, and significant infrastructure amid political pushes for quick returns.
While small production increases (100k-200k bpd) might happen sooner, especially from areas like Lake Maracaibo where Chevron (NYSE:CVX) operates, the energy leaders have emphasized that a significant boost requires massive, long-term investment.
Companies will need stable, legally defined frameworks, security for investments (including protection from expropriation), and clear commercial terms before committing major capital. President Trump has urged U.S. oil majors to invest up to $100 billion to revitalize Venezuela's vast reserves, seeing it as a way to lower global energy prices.
Rystad Energy, a Norwegian energy research firm, recently estimated that restoring Venezuela's oil production to its previous peak of 3 million barrels per day (bpd) would require a total investment of $183 billion over 15 years. This massive investment is needed because the country's oil infrastructure is in severe disrepair due to years of neglect, underinvestment, and sanctions. Rystad views a gradual recovery as the most likely scenario, with a full return to peak production dependent on long-term stable market conditions and a secure investment climate.
ExxonMobil CEO Darren Woods recently termed Venezuela as "uninvestable" due to deep legal, commercial, and political risks, despite U.S. President Trump's push for investment to rebuild its oil sector after the Maduro regime's removal. Other major oil companies, like ConocoPhillips (NYSE:COP) and Chevron, have echoed this sentiment, citing complex issues such as asset seizures, lack of clear frameworks, corruption, and political instability as major barriers to committing billions in investment.
ExxonMobil and ConocoPhillips lost assets worth billions of dollars in Venezuela after former President Hugo Chávez undertook a nationalization drive in 2007, where he forced foreign oil companies to cede majority control to the state oil company (PDVSA) in lucrative Orinoco Belt projects. Venezuela expropriated their operations after the two companies refused to accept minority stakes and renegotiated terms, leading them to exit the country and pursue lengthy, largely unresolved international arbitration for billions in compensation.
By Alex Kimani for Oilprice.com
- Oil industry executives have voiced that reviving Venezuela's oil production will be a long and costly process.
- Companies will need stable, legally defined frameworks, security for investments, and clear commercial terms before committing major capital.
- Rystad Energy recently estimated that restoring Venezuela's oil production to its previous peak of 3 million barrels per day (bpd) would require a total investment of $183 billion over 15 years.
American Petroleum Institute (API) CEO, Mike Sommers, alongside other industry leaders like TotalEnergies' (NYSE:TTE) Patrick Pouyanne, have warned that reviving Venezuela's oil industry will be a long, costly, multi-billion dollar process requiring clear legal frameworks, strong investment security, and significant infrastructure amid political pushes for quick returns.
While small production increases (100k-200k bpd) might happen sooner, especially from areas like Lake Maracaibo where Chevron (NYSE:CVX) operates, the energy leaders have emphasized that a significant boost requires massive, long-term investment.
Companies will need stable, legally defined frameworks, security for investments (including protection from expropriation), and clear commercial terms before committing major capital. President Trump has urged U.S. oil majors to invest up to $100 billion to revitalize Venezuela's vast reserves, seeing it as a way to lower global energy prices.
Rystad Energy, a Norwegian energy research firm, recently estimated that restoring Venezuela's oil production to its previous peak of 3 million barrels per day (bpd) would require a total investment of $183 billion over 15 years. This massive investment is needed because the country's oil infrastructure is in severe disrepair due to years of neglect, underinvestment, and sanctions. Rystad views a gradual recovery as the most likely scenario, with a full return to peak production dependent on long-term stable market conditions and a secure investment climate.
ExxonMobil CEO Darren Woods recently termed Venezuela as "uninvestable" due to deep legal, commercial, and political risks, despite U.S. President Trump's push for investment to rebuild its oil sector after the Maduro regime's removal. Other major oil companies, like ConocoPhillips (NYSE:COP) and Chevron, have echoed this sentiment, citing complex issues such as asset seizures, lack of clear frameworks, corruption, and political instability as major barriers to committing billions in investment.
ExxonMobil and ConocoPhillips lost assets worth billions of dollars in Venezuela after former President Hugo Chávez undertook a nationalization drive in 2007, where he forced foreign oil companies to cede majority control to the state oil company (PDVSA) in lucrative Orinoco Belt projects. Venezuela expropriated their operations after the two companies refused to accept minority stakes and renegotiated terms, leading them to exit the country and pursue lengthy, largely unresolved international arbitration for billions in compensation.
By Alex Kimani for Oilprice.com
Shipping Firms Scrambling to Expand Capacity for Venezuela Oil Transfers
Oil traders and shipping companies are scrambling to expand tanker operations to move Venezuelan crude as Washington prepares to take delivery of sanctioned oil following the ouster of President Nicolás Maduro, according to multiple sources familiar with the matter.
Trading houses and oil majors including Chevron, Vitol, and Trafigura are competing for U.S. government-backed export deals after President Donald Trump said Venezuela could hand over up to 50 million barrels of crude to the United States. Trafigura told U.S. officials last week that its first vessel could load within days, sources said.
The logistical challenges are significant. Years of sanctions have left Venezuela storing crude in aging, poorly maintained tankers and nearly full onshore tanks. Many of the vessels holding the oil are under sanctions and cannot be directly accessed by other ships due to insurance and liability restrictions, even with U.S. licenses in place. Onshore storage facilities are also in disrepair, raising safety and operational risks.
Shipping firms, including Maersk Tankers and American Eagle Tankers, are examining ways to expand ship-to-ship transfer operations off Venezuela, sources said. One option under consideration is replicating logistics previously used in Amuay Bay, involving transfers between storage vessels, piers, and export tankers. However, these operations face constraints, including limited availability of smaller feeder ships, competition for loading slots, and poorly maintained port equipment.
Transfers through nearby waters such as Aruba and Curaçao remain possible but are costlier than direct loadings, sources noted.
AET, which already supports Chevron’s Venezuelan crude exports, has been approached by potential clients seeking to expand transfer capacity, according to people familiar with the discussions. Maersk Tankers, AET, and Chevron did not immediately respond to requests for comment.
While exports could eventually approach the roughly 500,000 barrels per day Venezuela shipped to the U.S. before sanctions, sources cautioned that draining accumulated inventories could take three to four months and will depend on resolving bottlenecks at the Jose terminal, where capacity is limited.
To support exports, oil companies are also sourcing naphtha from the United States to blend with Venezuela’s heavy crude, reducing viscosity and making the oil transportable and refinery-ready.
By Charles Kennedy for Oilprice.com
Oil traders and shipping companies are scrambling to expand tanker operations to move Venezuelan crude as Washington prepares to take delivery of sanctioned oil following the ouster of President Nicolás Maduro, according to multiple sources familiar with the matter.
Trading houses and oil majors including Chevron, Vitol, and Trafigura are competing for U.S. government-backed export deals after President Donald Trump said Venezuela could hand over up to 50 million barrels of crude to the United States. Trafigura told U.S. officials last week that its first vessel could load within days, sources said.
The logistical challenges are significant. Years of sanctions have left Venezuela storing crude in aging, poorly maintained tankers and nearly full onshore tanks. Many of the vessels holding the oil are under sanctions and cannot be directly accessed by other ships due to insurance and liability restrictions, even with U.S. licenses in place. Onshore storage facilities are also in disrepair, raising safety and operational risks.
Shipping firms, including Maersk Tankers and American Eagle Tankers, are examining ways to expand ship-to-ship transfer operations off Venezuela, sources said. One option under consideration is replicating logistics previously used in Amuay Bay, involving transfers between storage vessels, piers, and export tankers. However, these operations face constraints, including limited availability of smaller feeder ships, competition for loading slots, and poorly maintained port equipment.
Transfers through nearby waters such as Aruba and Curaçao remain possible but are costlier than direct loadings, sources noted.
AET, which already supports Chevron’s Venezuelan crude exports, has been approached by potential clients seeking to expand transfer capacity, according to people familiar with the discussions. Maersk Tankers, AET, and Chevron did not immediately respond to requests for comment.
While exports could eventually approach the roughly 500,000 barrels per day Venezuela shipped to the U.S. before sanctions, sources cautioned that draining accumulated inventories could take three to four months and will depend on resolving bottlenecks at the Jose terminal, where capacity is limited.
To support exports, oil companies are also sourcing naphtha from the United States to blend with Venezuela’s heavy crude, reducing viscosity and making the oil transportable and refinery-ready.
By Charles Kennedy for Oilprice.com
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