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Industry experts have expressed deep doubt regarding optimistic predictions that American energy majors will quickly pump billions of dollars to fix Venezuela's dilapidated energy sector.

Requirement of Absolute Guarantees

Without an solid promise of financial backing from the American government, experts believe multinational oil companies to proceed with great care.

“It would be too early to discuss any future business activities,” an official said this weekend.

The ambitious timeframe of less than 18 months has been boldly proposed. However, realistic assessments suggest a different picture.

A Probable Schedule

“Chances are going to take 36 months for any significant recovery in production,” commented an chief investment officer.

The analysis indicates energy firms would likely spend:

• The first year: Sorting through new operating agreements.
• Following phase: Investing in overhaul of facilities.
• The third year: Reaching a position to significantly ramp up yield.

This suggests an boost of around 500,000 bpd perhaps by the end of the decade.

Interest vs. Readiness for Spending

There is a critical difference between firms' attention and their readiness to commit heavily.

“In my view their curiosity is an high score, on a range of one to 10. I think their readiness is a much lower, because there is a lack of certainty yet.”

Seasoned diplomats in the region reinforce this sentiment. The expectation is that majors will publicly call it fantastic while in practice acting with extreme caution.

The Vast Cost

The monetary investment would be vast. Independent projections suggest that adding between half a million and a million bpd would require in excess of $10 billion in capital spending over several years.

Yet, rebuilding output to peak levels of around 2.5 million barrels per day could require a monumental $80 billion to $90 billion over six or seven years.

The Pending Question of Government Backing

The idea of firms being compensated by the federal government has been repeatedly floated. Nevertheless, formal assurances on any guarantee have so far not been forthcoming.

Without certainty is the primary reason for the sector's hesitation. Operators seek protection against nationalization and the risk that a subsequent president could renege on any agreement.

“They must be protected from political change, that we’ve witnessed in Venezuela before.”

Therefore, while political confidence runs high, the operational risks suggest a path of slow deliberation for any significant investment in the Venezuelan oil sector.