Take a look at the above picture and you will quickly realize why oil in Venezuela will play a critical role in any possible return to democracy in the South American country.
After taking over American oil and gas operations, Venezuelan leaders, the late Hugo Chavez and now-captured Nicolas Maduro, drove the energy industry into ruins. While the country has a massive oil and gas reserve, it was allowed to crumble into ruins over the past decade or more.
President Trump professes his plan will turn things around for the people of Venezuela and he will do it largely through a restoration of the oil and gas industry. This week, he stated Venezuela would relinquish up to 50 million barrels of oil, worth roughly $2.8 billion, to the U.S. and Venezuela would share in the profits from the sale.
“The oil business in Venezuela has been a bust, a total bust, for a long period of time,” Trump said Saturday, hours after Maduro was captured by U.S. Special Forces. “We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country.”
On Friday, President Trump plans to meet with a dozen oil executives in the White House to discuss boosting Venezuelan oil production.
The Gulf Coast refineries, especially Louisiana, will be heavily impacted. Texas? Not so much, according to a report by the Texas Tribune which quoted Todd Staples, President of the Texas Oil and Gas Association.
“The Permian has been the best place … to do business for years and we had a surrounding infrastructure that made that attractive,” said Todd Staples, president of the Texas Oil and Gas Association. He added that getting U.S. companies to produce Venezuelan oil is going to require “a massive infusion of capital and that has to be acquired from willing investors,” Staples said. “Considering the circumstances globally … that tells me it’s going to be years in the making.”
Chevron, headquartered in Houston, is the only U.S. company still operating in Venezuela after former President Hugo Chávez in 2007 nationalized assets belonging to U.S. and other Western companies. The company has seen its share price rise in the aftermath of the U.S. military operation that brought Maduro and his wife to New York, where they face federal charges related to drug smuggling and weapons violations, reported the Tribune.
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