President Donald Trump painted a picture over the weekend of how US oil companies would dive into Venezuela after the ouster of President Nicolás Maduro and “spend billions of dollars, fix the badly broken infrastructure” and "start making money for the country".

But Trump’s oil goals face formidable challenges.

A handful of Western producers with operations or deals in place in Venezuela could ramp up relatively quickly if the political conditions were right. But a more substantial revitalisation of the country’s flagging oil and gas industry most likely would take years and tens of billions of dollars in investment.

The potential prize is huge — Venezuela boasts the largest oil reserves in the world — but so are the risks, and US energy companies like Exxon Mobil and ConocoPhillips have been burned in Venezuela before. Oil prices are also low, having fallen more than 20 per cent in the past year, making it harder for companies to justify new spending.

For now, two of the big questions facing oil companies are how Venezuela’s government will rebuild after Maduro’s capture, and whether the US lifts the sanctions it has imposed to weaken the country’s economy.

“Not many companies are going to rush to go into an environment where there’s not stability,” said Ali Moshiri, who oversaw Chevron’s operations in Venezuela until 2017 and now runs a private oil company that has interests in the country.

Chevron, the largest private oil producer in Venezuela, and smaller operators could potentially help increase the country’s oil output to as much as 1.5 million barrels a day within 18 months, Moshiri said. That would cost up to $7 billion, assuming an estimated current level of around one million barrels a day, he said.

Still, that would leave Venezuela producing little more than 1 per cent of the oil the world uses and less than half of what it was pumping in the late 1990s.

Further expansion most likely would take years. That is because a lot of Venezuela’s oil infrastructure is in disrepair, and even if producers express interest in returning, it would take time for them to negotiate contracts and reestablish a footprint in the country.

“So much depends on politics and who’s in charge,” said Daniel Yergin, a Pulitzer Prize-winning energy historian and vice chairman of the research firm S&P Global.

Some analysts drew parallels to Iraq, where it took years for oil production to recover after the US invaded in 2003.

For now, Venezuela’s oil industry remains under US sanctions, crippled by an aggressive campaign against many of the tankers used to export the country’s oil. Those restrictions will remain as the US leans on the Venezuelan government to make policy changes, secretary of state Marco Rubio said on Sunday.

“That’s a tremendous amount of leverage that will continue to be in place until we see changes, not just to further the national interest of the United States, which is No. 1, but also that lead to a better future for the people of Venezuela,” Rubio said on Face the Nation on CBS News.

Only Chevron has been able to regularly export oil in the weeks since the US seized a vessel, called Skipper, on December 10, according to TankerTrackers.com, which monitors global shipping. The company holds a unique licence from the Trump administration that has allowed it to continue operating in Venezuela and sending oil to refineries on the US Gulf Coast.

New York Times News Service