(Reuters) – The Trump administration on Tuesday dismissed analysts’ estimates that it would take years to ramp up Venezuela’s crude production, saying there were ways to quickly boost the country’s oil sector. Raising crude output from the South American nation, which sits on the world’s largest oil reserves, is a top objective for President Donald Trump after U.S. forces seized Venezuela’s leader, Nicolas Maduro, in a raid on its capital Caracas on Saturday.
The country’s exports have fallen to below 1 million barrels per day from over 3 million bpd two decades ago amid a prolonged lack of investment that has left its infrastructure in shambles.
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‘ENORMOUS’ BUSINESS OPPORTUNITY
U.S. Interior Secretary Doug Burgum said one option was for Washington to lift sanctions on Venezuela that had prevented the country from accessing crucial oil field equipment and other technologies to maximize production.
“Some of these things could be done very quickly,” he told Fox Business Network in an interview. “The opportunity on the business side here is really enormous.” The Trump administration plans to meet U.S. oil executives this week, a source told Reuters on Monday, but it is unclear when or who will participate. Energy Secretary Chris Wright is scheduled to speak at a Goldman Sachs conference in Miami on Wednesday morning, just before ConocoPhillips CEO Ryan Lance is scheduled to make closed-door comments.
Trump says the U.S. industry could expand operations in Venezuela in less than 18 months, possibly with the help of subsidies.
“I think we can do it in less time than that, but it’ll be a lot of money,” Trump told NBC News on Monday. “A tremendous amount of money will have to be spent, and the oil companies will spend it, and then they’ll get reimbursed by us or through revenue.”
Trump said on Tuesday in remarks to U.S. House Republicans that increasing Venezuelan production could also reduce energy costs for Americans.
“We got a lot of oil to drill, which is going to bring down oil prices even further,” Trump said.
DEGRADED INFRASTRUCTURE, COSTLY DEVELOPMENT
Oil analysts and executives have been skeptical about a quick revival of Venezuela’s oil sector, pointing out that its degraded infrastructure would require billions of dollars and years to overcome.
Venezuela’s oil reserves are among the world’s costliest to develop because the oil is so thick and heavy it requires specialized equipment to extract, transport and refine into usable fuels.
With global oil prices low at around $60 a barrel, producers have been focusing on reserves that are cheaper and easier to develop.
“It’s hard to imagine increases beyond 300,000-400,000 barrels a day in the next year, just given the degraded state of the infrastructure, especially the upgraders,” Daan Struyven, co-head of global commodities research at Goldman Sachs, said at the Goldman Sachs Energy, CleanTech & Utilities Conference.
He said it would take until the end of the decade for Venezuela to reach 1.5 million to 2 million bpd, and likely only with significant support from the U.S. government.
“I wouldn’t rule it out, but it will require time, significant institutional changes,” he said.
Chevron is the only U.S. major operating in Venezuela’s oil fields. Exxon Mobil and ConocoPhillips had storied histories in the country before their projects were nationalized by former President Hugo Chavez nearly two decades ago.
The Department of Energy did not immediately respond to a request for comment.
Reporting by Steve Holland, Trevor Hunnicutt and Susan Heavey in Washington, Nathan Crooks and Sheila Dang in Miami; Writing by Richard Valdmanis; Editing by Rod Nickel
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