President Trump has made no secret that he wants U.S. oil companies to profit off his removal of Venezuelan President Nicolás Maduro by investing in rebuilding Venezuela's oil infrastructure and sharing in the money that would follow.
Late Tuesday, he posted on Truth Social that Venezuelan authorities will turn over to the U.S. between 30 million and 50 million barrels of sanctioned oil, which will then be sold at market price, with the proceeds controlled by Trump.
But seizing current oil production is one thing; overhauling Venezuela's entire oil industry would be another.
Independent research firm Rystad Energy has estimated it would take $183 billion over more than a decade to restore Venezuelan oil production back to a 1990s-era level, more than tripling it from its current rate of less than 1 million barrels a day.
And companies might be hesitant to rush in — or, rather, rush back in. Chevron is the only U.S. oil company still operating in Venezuela; ExxonMobil and ConocoPhillips left after the Venezuelan government forcibly renegotiated contracts around 2007, which cost them billions of dollars. International courts have ordered Venezuela to reimburse Exxon and Conoco, a bill that remains mostly unpaid.
Venezuela's once-thriving oil fields are plagued by power cuts, corroded pipelines and stolen equipment. But most of all, says Kevin Book, the managing director of independent research firm ClearView Energy Partners, "it's not just a geologic problem or an engineering problem, but a math problem." Specifically, this math problem: Can companies make a profit off the huge investments required to boost production?
For now, the major oil companies have not publicly indicated what they're planning to do, and they declined to comment for this story.
But analysts say the companies must evaluate whether the political situation in Venezuela will stabilize enough that they would once again be willing to commit billions of dollars to long-term projects.
An oil glut and low prices
One big factor in the math problem is that right now, the world is making more oil than it needs. By some calculations, the oversupply is approximately 2 million barrels per day, twice Venezuela's total current daily production.
"If that sounds like a lot," Book says, "it is."
And because the world has more oil supply than demand, global crude prices are quite low; the global benchmark is a little over $60 per barrel.
Meanwhile, the breakeven price for projects in Venezuela to turn a profit is more like $80, according to Claudio Galimberti, the chief economist for Rystad Energy.
"These companies would not go there if they know that the breakeven is $80 per barrel and that the prospects are for the next two, three, four years, oil prices stay between $60 and $70 per barrel," Galimberti says. "They won't do it, because it makes no sense."
Companies have been selective with their investments in recent years, focusing on ones that are likely to be profitable. That might seem obvious, but it hasn't always been the case. About 15 years ago, when new technology like fracking unlocked the oil in shale formations in the U.S., companies went a little wild.
"The go-go days of shale tended to be a 'drill first and figure out the math later' time in the oil industry's history," says Book. "And it didn't go that well for many of the companies that produced first and asked questions later."
Right now, companies are asking the questions first.
That doesn't mean they won't invest. But Galimberti thinks they might require significant incentives — subsidies — from either Caracas or Washington, as well as proof of political stability.
Heavy, viscous crude
Another variable in that math problem: The type of crude oil that is abundant in Venezuela is kind of gnarly.
"It is one of the heaviest and one of the dirtiest crudes that you can find," Galimberti says.
Heavy crude is thick and sticky. It's more difficult, and therefore expensive, to extract, transport and refine. Producing it also releases more planet-warming gases than other kinds of crude, making it worse for the climate.
That's an environmental mark against Venezuelan crude. And it poses some logistical problems, like the need to import substances to dilute the crude enough for it to flow through pipelines.
But economically, it's not as big of a challenge as you might think — it might even give companies an incentive to pursue it.
That's because U.S. refineries along the Gulf Coast are perfectly positioned to process this tricky oil.
Decades ago, those refineries invested in expensive technology for refining it, because of their geographic proximity to Venezuela, Mexico and Canada — all sources of heavy crude.
Then the shale revolution happened, and the U.S. was flooded with light, sweet crude that doesn't require this technology.
Today, according to the American Fuel & Petrochemical Manufacturers trade group, 70% of U.S. refining capacity is optimized for heavy crude — while the vast majority of U.S. production is light crude.
So some of that fancy technology is going to waste. If the situation in Venezuela stabilizes and oil companies do move in and boost production, Galimberti says, U.S. refineries would be well positioned to fully utilize their existing equipment and make more money.
An eye to the future
Then, of course, companies have to consider the long game. There's an oil glut today. But what happens next?
Oil demand may sink over time, depending on factors like sales of electric vehicles and whether China — one of the biggest global sources of energy demand — transitions to renewables.
But then again, maybe the world will stay hungry for oil. And either way, companies will need to make up for declining output from existing, aging wells — which means drilling new ones.
And there aren't many places in the world with as much oil potential as Venezuela.
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