“Take the Oil” | The Nation

As he puts it, Venezuela’s oil production – now at historic lows – can be rapidly increased by US companies, generating huge profits for US companies and Trump’s chosen beneficiaries (presumably including various allies and apparatchiks of the Trump family’s business empire). But all this flies in the face of economic and geological reality, which stands in the way of any rapid increase in Venezuelan oil production and profits.

For starters, you can’t just “take the oil” from Venezuela’s fields. Most of Venezuela’s untapped oil is extra-heavy crude, a substance that more closely resembles Canadian tar sands than the liquid materials seeping from the ground in countries like Saudi Arabia and Iran. Extracting and processing Venezuelan heavy crude requires specialized skills and equipment that only a few large international companies possess. Much of the existing infrastructure needed for this has deteriorated in recent years – a consequence of US sanctions, poor management of PdVSA and the departure of qualified technicians. It is therefore not surprising that Venezuela’s oil production has declined sharply in recent years, from 2.7 million barrels per day in 2011 to around 800,000 barrels per day in 2023.

Simply restoring previous yields to fields already in production will require years of effort and immense expense. Analysts at Energy Aspects, a London-based consultancy, said The New York Times that adding half a million barrels per day to Venezuela’s oil production would cost about $10 billion and take about two years. To restore production levels reached before 2011, the company noted, it could require “tens of billions of dollars over several years.”

If this were the “golden age” that Trump often refers to, when global demand for oil was growing and major U.S. oil companies were eagerly seeking new deposits to exploit, we might expect a rush by U.S. companies to access Venezuela’s newly reopened reserves. But global demand is not expected to increase significantly in the coming years as electric vehicles (EVs) gain popularity, so large companies are not rushing to increase capacity. Predicting future oil prices is always risky, but there is no reason to assume that oil prices will rise from their current rate of $60 per barrel to $90 per barrel or more, thus justifying the multibillion-dollar investments that will be needed to restore Venezuela’s oil fields to their former glory.

What is more likely is a random sale of PdVSA’s assets to various oil wealth aspirants – some with the expertise to prosper and others not. It will certainly generate lots of money for well-connected lawyers, bankers, fixers and scammers in the United States and Venezuela, but not the immense wealth envisioned by Trump – and certainly not the benefits he promised ordinary Venezuelans.

Furthermore, to the extent that they compete for access to prime assets, some of these interests could resort to violence. This should not be entirely unexpected, given that some senior Venezuelan military and political officials have obtained important positions within PdVSA and other state-owned companies – valuable interests for which they may be willing to fight. Popular resistance to a takeover of Venezuelan oil fields by American companies, possibly in the form of infrastructure sabotage, is also conceivable. Under these circumstances, Trump may feel compelled to put “boots on the ground” in Venezuela, as he has threatened to do. Instead of generating new wealth for the United States and Venezuela, Trump’s desire to seize their oil could therefore lead to endless conflict, at high cost for both countries.