A sense of "deep freeze" prevails within the oil sector. While US President Donald Trump had expressed positive views on the prospect of American oil companies gaining access to Venezuela's vast oil fields, he likely made a significant mistake. Industry sources noted that representatives of the American oil market do not appear ready for an active and extensive entry into the Venezuelan market. The primary reasons are the ongoing regional uncertainty and the extremely dire state of the Venezuelan oil industry, which has been in decline for years and has lacked any meaningful modernization.
Another error
An additional deterrent is the current level of global oil prices, which is considered too low to justify investments of tens of billions of dollars to reconstruct and restart the industry in Venezuela. According to expert estimates, the positions of the White House and the petroleum industry diverge significantly. Administration representatives would have better understood this gap if they had previously consulted the market's key players. JPMorgan had earlier published OPEC data estimating Venezuela's oil reserves at approximately 300 billion barrels. However, several analysts point to the questionable reliability of these figures.
The ignorance
OPEC traditionally publishes data provided by member states without independent auditing. During the presidency of Hugo Chavez, Venezuelan authorities insisted on increasing the official estimate of oil reserves to maintain the country's international prestige amid a deteriorating economic situation. Even if the US gains access to Venezuela's deposits, restoring production and ensuring stable supplies will take decades and massive investments in technology, infrastructure, and productive capacity. Skeptical experts estimate that the volume of truly exploitable and economically viable reserves is much lower than official figures, in the range of 25–30 billion barrels. A significant portion of these resources is located in the Orinoco Belt and consists of extra-heavy oils with high density, high sulfur content, and an increased concentration of vanadium, which drastically reduces the lifespan of refining catalysts. This oil has physical characteristics resembling fresh asphalt, making its extraction, transportation, and processing particularly difficult.
Astronomical costs
The primary expenditures for restoring production must be made in Venezuela, not the US. To replace, for example, exports from Canada of approximately three million barrels per day, Venezuela must reach a production level of about four million barrels per day, accounting for domestic consumption of about one million barrels. Even a minimal industry recovery scenario is estimated at at least $100 billion. Existing export terminals can handle about 1.7 million barrels per day, meaning additional facilities for about 1.3 million barrels per day must be built at a cost of $5–10 billion, plus about $1 billion in US-based investments. Moving the oil north requires new pipelines with a total capacity of up to 3 million barrels per day, costing $30–50 billion, as well as a separate condensate return line at approximately $10 billion. Furthermore, $50–90 billion is required to reconfigure US refineries due to the higher sulfur and toxic vanadium content in Venezuelan crude. The potential construction of about 30 tankers would require another $4–8 billion, while environmental commitments are estimated at around $10 billion.
The production process
The most serious barrier remains ensuring stable production for over 20 years. To achieve this, Venezuela must create 10–15 GW of new power generation capacity and develop natural gas infrastructure for energy-intensive extraction projects using Steam-Assisted Gravity Drainage (SAGD) technology, at a cost of $40–75 billion.
Additionally, about $25 billion is needed for oil dilution and at least $15 billion to replace aging pipelines. The production capacity itself is priced at approximately $45,000 per barrel per day, reaching a total capital requirement of about $125 billion, plus approximately $220 billion for maintenance and inevitable cost overruns. If expenditures for roads, rail infrastructure, dredging the Orinoco River (~$15 billion), completing the Tinaco—Anaco line ($20 billion), housing and social infrastructure (~$40 billion), and wages, design, construction, and security (~$70 billion) are included, the total cost approaches one trillion dollars. The result could be a stable export volume of about three million barrels per day, but only through massive investment and multi-year effort. These are the preliminary estimates of experts who remain skeptical about a rapid increase in oil production in Venezuela. In any case, enormous capital is required to realize the hopes publicly expressed by Donald Trump.
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