Trump taking ‘drill, baby, drill’ plan to Venezuela ‘terrible’ for climate, experts warn | Trump administration

Donald Trump, by spectacularly seizing Nicolás Maduro and claiming dominance over Venezuela’s vast oil reserves, has extended his “drill, baby, drill” mantra globally. Realizing the president’s dream of increasing the country’s oil production would be a financial challenge – and if it came true, it would be “terrible for the climate”, experts say.

Trump has aggressively sought to boost U.S. oil and gas production. Now, after the capture and arrest of Maduro and his wife, Cilia Flores, he is seeking to orchestrate an acceleration of drilling in Venezuela, which has the world’s largest known oil reserves – equivalent to some 300 billion barrels, according to the research firm Energy Institute.

“The oil companies are going to come in, they’re going to spend money, we’re going to take the oil back, frankly, we should have taken it back a long time ago,” the US president said following Maduro’s extraction from Caracas. “A lot of money is coming out of the ground, we are going to be reimbursed for everything we spend.”

U.S. oil companies will “spend billions of dollars, repair badly damaged infrastructure…and start making money for the country,” Trump added, as his administration pressured Venezuela’s interim government to remove a law requiring oil projects to be half state-owned.

Major U.S. oil companies such as Exxon and Chevron have so far remained silent on whether they would spend the enormous sums needed to implement the president’s vision for Venezuela. But if Venezuela increased production to near its 1970s peak of 3.7 million barrels per day – more than triple current levels – it would further undermine already faltering global efforts to limit dangerous global warming.

Even increasing production to 1.5 million barrels of oil per day, from current levels of about 1 million barrels, would produce about 550 million tons of carbon dioxide per year when the fuel is burned, according to Paasha Mahdavi, an associate professor of political science at the University of California, Santa Barbara. This represents more carbon pollution than is emitted each year by large economies such as the UK and Brazil.

“If there are millions of barrels of new oil a day, that will add a lot of carbon dioxide to the atmosphere and people on Earth can’t afford that,” said John Sterman, a climate and economics expert at the Massachusetts Institute of Technology.

Climate costs would be particularly high because Venezuela produces some of the highest carbon-emitting oil in the world. Its vast reserves of extra-heavy crude are particularly dirty, and its other reserves are “also very carbon and methane intensive,” Mahdavi said.

The world is on the verge of exceeding agreed limits on temperature increases – already experiencing more severe heatwaves, storms and droughts as a result. Increased Venezuelan drilling would further depress global oil prices and slow the needed momentum toward renewable energy and electric cars, Sterman added.

“If oil production increases, climate change will worsen sooner and everyone will lose, including the Venezuelan people,” he said. “The climate damage to Venezuela, as well as other countries, will almost certainly outweigh any short-term economic benefits from selling a little more oil. »

During his first year in the White House, Trump demanded that the world continue to run on fossil fuels rather than “fraudulent” renewable energy and threatened annexation of Canada, a major oil-producing country, and Greenland, an Arctic island rich in mineral resources.

Critics have accused Trump of fossil fuel-driven “imperialism” that threatens to further destabilize the global climate and upend international politics. “The United States must stop treating Latin America like a resource colony,” said Elizabeth Bast, executive director of Oil Change International. “It is the Venezuelan people, not America’s oil executives, who must shape their country’s future. »

Patrick Galey, head of fossil fuel investigations at climate and justice NGO Global Witness, said Trump’s aggression in Venezuela is “another conflict fueled by fossil fuels, which are overwhelmingly controlled by some of the world’s most despotic regimes.”

“As long as governments continue to rely on fossil fuels in their energy systems, their voters will be hostage to the whims of autocrats,” he said.

A complex economic context

Although the president’s stated vision is for U.S.-based oil companies to exploit Venezuela’s oil reserves for profit, achieving that promise could be complicated by economic, historical and geological factors, experts say.

Oil companies may not be “willing to invest what is necessary because it will take much longer than President Trump’s three years in office,” Sterman said.

“It represents a lot of risk – political risk, project risk,” he said. “It seems very tricky.”

Increasing production is “usually just a bad bet,” Galey said. “Any significant increase in current production would require tens of billions of investments in areas such as repairs, upgrades and replacement of creaking infrastructure,” he said. “This doesn’t even take into account the dire security situation.”

Venezuela’s oil production has fallen dramatically from its historic highs — a decline that experts attribute to both mismanagement and U.S. sanctions imposed by Barack Obama and intensified by Trump. In 2018, the country produced just 1.3 million barrels per day, about half of what it produced when Maduro took office in 2013, just over a third of what it produced in the 1990s, and about a third of its peak output in the 1970s.

Trump said American companies would restart their production levels and be “reimbursed” for the costs incurred to do so. But the economics of this expansion may not attract the energy majors, and even if they chose to play the game, it would take years to significantly boost extraction, experts say.

Increasing Venezuela’s oil production by 500,000 barrels per day would cost about $10 billion and take about two years, according to Energy Aspects. Production could reach between 2 and 2.5 million barrels per day within a decade by tapping average crude reserves, Mahdavi said. But returning to maximum production would require development of the Orinoco belt, whose heavy, sulfur-rich crude is much more expensive and difficult to extract, transport and refine.

Returning to 2 million barrels per day by the early 2030s would require about $110 billion in investment, according to Rystad Energy, an industry consultancy.

“It’s going to take a lot more time and a lot more money to be able to reach or approach maybe 3, 4 or 5 million barrels per day of production,” Mahdavi said.

Increasing Venezuelan extraction amid booming U.S. production could also prove a tough sell. “Heavy Venezuelan crude that could be refined at U.S. Gulf Coast facilities will likely hurt domestic producers, who until Trump removed Maduro openly supported sanctions on Venezuelan oil,” Galey said.

Some companies may be willing to “eat this uncertainty” because the United States plans to provide companies with financial support to drill in Venezuela, Mahdavi said.

“If you’re willing to take on the challenges…you’re always looking for relatively cheap crude that’s going to give you a higher profit margin than what you can do in the United States,” he said. “That’s why they’re still interested: It’s much more expensive to drill in, say, the Permian Basin of the United States.”

Some U.S. oil majors may be more receptive to Trump’s Venezuela strategy. Chevron, the only U.S. company in the country, may be poised to increase production faster than its competitors. And ExxonMobil, which has invested heavily in oil production in neighboring Guyana, could benefit from the departure of Maduro, who strongly opposes this expansion.

However, overall, it remains unclear how US oil majors will respond to Trump’s plans for regime change and increased oil extraction in Venezuela. What is much clearer is that any expansion would be “terrible for the climate, terrible for the environment,” Mahdavi said.