Ever since the Trump Administration sent armed forces to arrest Venezuelan President Nicolas Maduro last weekend, the energy industry has seemed excited that Venezuela may be open for business again.

But not loudly. You don’t see CEOs yelling, “I’m in on this!!”

Maybe they fear new production will weigh on oil prices. But oil prices already are soft because there’s too much of it. Prices fell on Tuesday and were lower on Wednesday.

At the same time, nearly all the stocks in the Standard & Poor’s 500 energy sector fell on Tuesday, including Chevron, down 4.5%; ExxonMobil (XOM), down 3.4%; and ConocoPhillips (COP), down 2.1%. The sector overall was the worst S&P 500 performer, down 2.8%.

But they’re interested. President Donald Trump is supposed to meet with several CEOs at the White House to try to convince them to invest in Venezuela. Chevron is already there. Exxon and Conoco had their operations nationalized in the mid-2000s and will listen to the pitch.

The industry has made Venezuelans rich and ruined them. Corruption has been so rampant that workers haven’t been paid. Businesses died. The economy is close to collapse; millions of Venezuelans have fled to other countries.

The physical state of Venezuela’s oil industry is disastrous. A thin veneer of oil coats much of Lake Maracaibo, along with drilling rigs.

Trump has big ambitions

Trump’s dream/vow is that U.S. oil companies can undo all that damage, well, lickety split.

He hopes, in fact, the Venezuelan industry will be back on its feet in, say, 18 months.

Money is beginning to organize to finance this new bonanza. In addition to meeting with oil executives, administration officials will be attending an industry meeting that takes place this week, conveniently, in Florida. You can bet Venezuela will be top of mind.

And in the process, President Trump and the U.S. have emerged as a key global player in energy.

Trump probably has “more influence on what’s happening in the oil market than anyone has had before,” Edward Morse, told Barrons this week. Morse is a senior advisor and commodities strategist at Hartree Partners, a global trading firm.

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Venezuela has played a key role in oil

And Venezuela has an important place in energy history. It became a big oil producer in the 1920s. By 1940, Venezuela was the world’s third-largest oil producer after the United States and the Soviet Union, with production concentrated around Lake Maracaibo.

Venezuela’s massive oil resources are concentrated in the northwest, around Lake Maracaibo, and in the Orinoco River basin in the southeast quadrant of the country.

Related: Venezuela shock may rock oil, stocks this week

The industry was producing three million barrels of oil a day when the 21st century dawned, much of it shipped to refineries on the U.S. Gulf Coast. But the resource has been mismanaged, money siphoned off to do this and that and ultimately squandered, production facilities allowed to become obsolete and derelict. The daily production now is down around 1 million barrels a day, according to the EIA.

EIA

The decline is blamed mostly on the nationalization of the oil industry. It started in 1976 in a bid to wrest control of the oil and diversify Venezuela’s economy, and accelerated when Hugo Chavez became president.

Newly formed Venezuelan companies took over from Exxon and others but were forced to abide by government rules and edicts. Sanctions were imposed against Chavez and, then, Maduro. The industry slowly starved of cash that would develop new prospects or modernize production.

The riches that could helped Venezuela diversify and grow its economy just didn’t.

Rebooting Venezuela’s oil production won’t be easy

The U.S. Geological Survey estimated in a 2009 study there may be 515 billion barrels of heavy crude oil waiting to be discovered in the Orinoco Basin alone.

But the problem with the Orinoco’s oil is its composition: heavy, thick, filled with noxious chemicals. It’s hard to pull out of the ground, harder to process into usable product. So it must be shipped to refineries built to handle the product.

Related: Top energy stocks to buy amid Venezuela chaos

The other big field, in and around Lake Maracaibo, is well developed and infamous for environmental degradation. It also mostly produces oil that’s more easily refined.

It will take billions of dollars of new investment to make the Orinoco oil commercial. And maybe tens of years of effort to make it all work without having the profits siphoned off by n’eer do wells.

The venture Trump envisions requires three things:

  • The aforementioned cash.
  • Patience on the part of Trump and his team.
  • The willingness of oil companies to go after a risky prospect when there are other, potentially better bets. Like offshore Brazil and its next-door neighbor, offshore Guyana.

The big mystery: Where’s the oil?

This may be a bigger reason why anyone considering a move into Venezuela will want and need more time to make investment decisions.

The reserves are a bit mysterious.

Venezuela, a member of the Organization of Petroleum Exporting Countries, is usually listed as the country with the largest proven reserves: 303 billion barrels, according to the EIA.

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Proven reserves indicate that drilling has successfully identified oil in a specific area, like the Permian Basin in the Southwest or Venezuela.

In addition, the quantity of oil that can be pumped out and turned into products can be reasonably estimated. Oil is typically turned into products: gasoline, jet fuel, motor oil, plastics, lubricants and the like.

And if the company plans to grow and survive, it must find new reserves. Reserves are the foundation piece of an oil company’s net worth.

There is one other very important qualification. If you have 1 million barrels of proved reserves in a location, you might get 500,000 barrels of production, more or less. The rest will stay in the ground until someone figures out a new way to pump more oil out, or prices explode.

Venezuela’s total reported reserves of 303 billion barrels and daily production of about 1 million barrels a day suggest the country has 885 years of production left.

The country raised its estimates of proved reserves from 100 million barrels in the early 2000s to 300 million barrels by 2010. But there were no known discoveries to justify the increase, according to a note from Torsten Slok, chief economist at Apollo Global Management.

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The problem is that any estimates of Venezuelan reserves begin with data issued by the Venezuelan government, dating back to the tenure of the late President Hugo Chávez. The reserve data hasn’t changed since 2010.

Because no one verifies the estimates independently.

In 2024, Rystad Energy, a global energy consulting firm based in Norway, analyzed the situation and estimated OPEC’s real reserves closer to 657 billion barrels. The official OPEC estimate: 1.215 billion. The report said that the number “could be inflated and overstated by almost double.” And most of that overstatement came from Venezuela, Iran, Libya and Kuwait.

Rystad’s estimate of Venezuelan reserves, from oil produced, say, tomorrow to oil produced many years hence, was possibly 81 billion barrels.

So, there’s the mystery and a big reason why it will take longer and cost so much money to pump all that Venezuela out of the ground.

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