Trump eyes Venezuela visit – but obstacles to his oil plan remain
After US President Donald Trump oversaw the seizure of his Venezuelan counterpart Nicolás Maduro last month, he vowed to tap the country’s oil reserves – the world’s largest.
Trump now says that he plans to visit the South American country, although no date has been set.
His comments, made last Friday, came after US Energy Secretary Chris Wright completed a two-day trip to Venezuela to see how the nation is starting to reopen its oil sector to US companies.
Wright’s visit came shortly after Venezuela’s National Assembly passed a law to allow both private and foreign investment in its oil industry, following two decades of tight state control.
In Trump’s eyes it is a big business opportunity for the US oil sector. “We’re going to be extracting numbers in terms of oil like few people have seen,” he said at a news conference in mid-January, after a meeting with energy bosses at the White House.
But for the US oil firms that Trump wants to invest heavily in Venezuela, the question is a simple one – do the numbers add up?
William Jackson, chief emerging markets economist at Capital Economics, says the US president’s aim is to “revive Venezuela’s oil sector and use that energy to increase supply and reduce costs to the consumer, possibly providing a source of revenue for a more friendly Venezuelan government to rebuild the economy after years of mismanagement”.
For US energy companies, however, there are huge practical difficulties to be overcome. Venezuela’s state-owned oil company, PDVSA, is a shadow of its former self.
The governments of Maduro and his predecessor, Hugo Chávez milked the firm for all it was worth, and used the money to finance social spending on housing, healthcare and transport.
But they failed to invest in maintaining oil production levels, which have plummeted in recent years – partly, but not solely, because of US sanctions, which could now be revised.
“In Venezuela, you’re dealing with equipment that’s been degraded by many years of neglect,” says Jackson. “Ten to 15 years ago, Venezuela was producing 1.5 million barrels a day more than it does today.”
Monica de Bolle, senior fellow at the Peterson Institute for International Economics, agrees that PDVSA is in a parlous state.
“A lot of things have to be scrapped completely and rebuilt from the ground up,” she tells the BBC. “In fact, if political constraints did not matter, the best thing to do would be to scrap PDVSA, but that isn’t going to happen.
“It’s a big nationalist symbol, it’s attached to sovereignty. Would the Venezuelans be willing to do whatever the US says and roll over? I don’t think so.”
