The U.S. government is working to gain more control of Venezuelan oil. President Trump previously stated that the U.S. would control Venezuela's oil industry and that he would meet with executives from all major U.S. oil companies to help rebuild the entire oil infrastructure.
However, this ambition of the US government has not won widespread support. According to a report by the think tank Center for a New American Security, the US naval blockade of Venezuela has already caused approximately $700 million in losses, and the losses are still increasing.
The report states that the daily operating costs of the USS Gerald R. Ford aircraft carrier and its carrier strike group, which were deployed to Latin American waters last October, exceed $9 million per day. Other unaccounted costs include the expenses incurred in the ship attacks that began in late August and the recent operation to capture Venezuelan President Maduro.
The White House did not comment on the economic costs estimated in the report, but a spokesperson emphasized that capturing Maduro would stop the flow of drugs and criminals and create economic opportunities for Venezuelans and Americans.
However, David Goldwyn, a researcher at the Atlantic Council and former Obama administration special envoy for international energy affairs, points out that Trump's strategy lacks consistency; he has invested heavily but with little return. There is currently no indication that Maduro's removal from power will bring any benefit to the United States, and Trump's attempts to grant the US special access to resources are also unpopular.
Input and output
To date, major U.S. oil companies have maintained a relatively restrained attitude toward Trump's plan to rebuild Venezuelan oil facilities, one important reason being that rebuilding is a time-consuming and labor-intensive undertaking.
According to research firm Rystad Energy, Venezuela's oil production is currently less than 1 million barrels per day, with a peak of 4 million barrels per day. However, more than doubling Venezuela's oil production may not be possible until 2030 and would cost approximately $110 billion.
Many American companies are also concerned about the long-term operational risks in Venezuela. ConocoPhillips and ExxonMobil are still owed billions of dollars by Venezuela, as a result of an international arbitration ruling following Venezuela's confiscation of its assets in 2007.
The prolonged slump in international oil prices is also a significant factor limiting these oil companies' ability to make major investment decisions. According to various institutions' forecasts, a severe oversupply of crude oil is expected this year, which will impact the oil industry's profits.
According to rough estimates, as Trump anticipates, the United States will import 30 to 50 million barrels of crude oil from Venezuela in phases and sell them within the United States. This portion of oil is worth between $1.6 billion and $2.8 billion at current benchmark prices.
According to the White House, this funding will initially be held by the US government, and energy companies may subsequently receive subsidies from the government or a share of energy revenue. However, these billions of dollars in revenue are a drop in the ocean compared to the initial investment of over $100 billion, and the US government also needs to use oil revenue to cover expenses for operations such as maritime blockades.
From an economic perspective, the caution of U.S. energy companies is not surprising; from a political risk perspective, Matt Reid, vice president of the geopolitical and energy consulting firm Foreign Reports, emphasizes that while the U.S. government provides incentives, only the Venezuelan government can persuade U.S. companies to take the risk of long-term investment.
