Trump wants to unlock Venezuela’s oil reserves. A huge challenge awaits

For months, the U.S. sold its pressure campaign against Venezuela as a way to curtail drug trafficking.

- Collin Eaton, Kejal Vyas & David Uberti

Problem with Trump's plan is that the world doesn't have appetite for more oil.

(AFP)

Now, it’s about getting American energy companies access to one of the world’s largest oil bounties.The Trump administration’s move to oust Venezuelan strongman Nicolas Maduro in a surprise military operation early Saturday will pave the way for U.S. oil companies to regain a foothold in the South American nation, President Trump said at a Mara-Lago press conference.

“We're going to have our very large United States oil companies, the biggest anywhere in the world, going spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” he said.

But getting foreign companies to flock back to Venezuela will be a massive challenge. Chevron is the only major U.S. oil company there and is the country’s largest foreign investor. Other oil executives will be forced to gauge the stability on the ground in a country where the industry has fallen into disarray after more than two decades of mismanagement and corruption.

The other obstacle facing Trump's effort to put more of Venezuela’s viscous crude into the global market is that the world doesn’t have much of an appetite for more oil. U.S. oil prices are languishing below $60 a barrel, a level that discourages investment for most American producers. Global supplies are expected to continue rising this year.

“One thing that works against it is the price of oil,” said Ali Moshiri, the former head of Chevron’s operations in Latin America and Africa. “In the environment we're in, if you're going to invest, do you put it in the Permian [Basin in the U.S.] or do you put it in Venezuela? That’s going to be a tough choice.”