Venezuela's enormous oil reserves should no longer be controlled by the Venezuelans themselves, but should be taken over by the United States. This was stated by US President Donald Trump after the US military attacked Venezuela on Saturday and arrested President Nicolás Maduro.
But such a takeover could be associated with major challenges, several analysts told the news agencies Reuters and CNN. Trump wants American companies to invest in Venezuela's oil industry - even though it is worn out.
- We will let our very large American oil companies - the largest in the world - go in and spend billions of dollars to repair the severely dilapidated infrastructure, the oil infrastructure, Trump said at a press conference on Saturday.
Venezuela's oil reserves are the world's largest, and the country has about a fifth of the world's total reserves. But the state has failed to exploit the economic potential of oil. Venezuela thus accounts for only 0.8 percent of global oil production.
According to CNN, the state-owned Venezuelan gas and oil company PDSVA has stated that its pipelines have not been maintained for the past 50 years.
According to CNN, an update to the oil industry's infrastructure that can ensure that production is up to full speed will cost an estimated $58 billion - or 370 billion kroner.
If the United States succeeds in exploiting its oil reserves, it will obviously be important for the global oil market. This could lead to significantly higher production.
- As far as oil is concerned, this is a historic event, Phil Flynn, a senior market analyst at the US brokerage and consultancy Price Futures Group, told CNN.
- The Maduro regime and Hugo Chávez have basically plundered the Venezuelan oil industry, he added.
Hugo Chávez was president of Venezuela before Maduro took office in 2013. Both have led socialist regimes.
Foreign sanctions targeting the Venezuelan government and a deep economic crisis in the country have contributed to the decline in oil production over the years. In addition, the sector has suffered from a lack of international investment.
Oil production could ramp up in 5-10 years
If US companies are to invest in Venezuela's oil industry, they will have to take into account the dilapidated infrastructure, an unstable security situation, potentially long-term economic instability and uncertainty about the legality of the US mission in Venezuela, writes Reuters.
According to Thomas O'Donnell, an energy and geopolitical advisor, oil production in Venezuela could ramp up within five to ten years if the US manages to ensure a peaceful transition from the Maduro regime to a new government in the country. But a lot can go wrong, he points out.
- A failed political transition period that creates a sense of American dominance could lead to years of resistance, Thomas O'Donnell told Reuters, citing armed groups operating in Venezuela.
Venezuela nationalized its oil industry in the 1970s, so foreign companies have so far operated in practice in partnership with the state.
/ritzau/
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