The El Palito refinery rises above a beach in Puerto Cabello, Venezuela (AP Photo)
Venezuela’s oil industry would “make a lot of money” with the US behind it, President Donald Trump said Saturday in a news conference. “We’re going to have our very large US oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” Trump said. He said the Venezuelan oil industry had been “a total bust,” for a long time, adding, “They were pumping almost nothing by comparison to what they could have been pumping.” Trump seems to be counting heavily on US intervention in the oil industry to help transform Venezuela, a proposition that could prove to be expensive.
How much oil does it produce? Venezuela claims to have more than 300 billion barrels in the ground, the largest reserves of oil of any country. But it struggles to produce about 1 million barrels a day, or around 1% of global production. In addition, much of Venezuela’s oil is extra heavy, making it polluting and expensive to process.What is the state of the oil industry in Venezuela? The industry has seen some recovery in recent years, but output is well below the more than 2 million barrels a day that Venezuela was producing in the early 2010s. The national oil company, known as PDVSA, lacks the capital and expertise to increase production. The country’s oil fields are run down and suffer from “years of insufficient drilling, dilapidated infrastructure, frequent power cuts and equipment theft,” according to a recent study by Energy Aspects, a research firm. Are any Western oil companies involved there?Chevron is the main Western oil company still operating in the country and produces about a quarter of Venezuela’s oil. Early in this century, when other companies were forced out, Chevron stayed, figuring that conditions might eventually improve. Roughly half of Chevron’s production is exported to the US.What would US control of oil production mean? In theory, if US-based oil companies were given greater access in Venezuela, they could help gradually revive the oil industry. “But it isn’t going to be a straightforward proposition,” said Richard Bronze, head of geopolitics at Energy Aspects. Analysts say increasing Venezuelan production will not be cheap. Energy Aspects estimated that adding another half a million barrels a day of production would cost $10 billion and take about two years. Major increases might require “tens of billions of dollars,” the firm said. The overthrow of govt may offer opportunities for US firms, but they could also find themselves into a messy situation, analysts say. Go to Source
