After the Donald Trump administration arrested Venezuela President Nicolás Maduro on the 3rd (local time) and said it would rebuild Venezuela's crude oil extraction industry, Chevron, the No. 2 U.S. oil company, is drawing attention. Chevron is the only company that did not withdraw from Venezuela after other major U.S. oil companies such as ExxonMobil exited.
In an interview with NBC News on the 5th (local time), President Trump said, "A project to improve Venezuela's poor energy infrastructure will be completed within 18 months." He added, "Large U.S. oil companies plan to invest billions of dollars to fix Venezuela's badly damaged oil-related infrastructure," and "the money they spend will be recouped through future government support or taxes."
In connection with this, U.S. Energy Minister Chris Wright is expected this week to discuss plans to normalize Venezuela's energy industry with executives from major U.S. oil companies, including Chevron, ExxonMobil and ConocoPhillips.
Venezuela is the largest holder of crude oil reserves, with about 17% of the world's proven reserves. In 1999, when former Venezuela President Hugo Chávez was in power, Venezuela was one of the world's top 10 oil producers, pumping about 3.5 million barrels a day. However, as the oil industry declined due to reduced government investment and corrupt politics, it now produces only about 0.8% of the world's oil supply.
According to Rystad Energy, a global energy consultancy, keeping Venezuela's oil production at about 1.1 million barrels a day would require roughly $53 billion (about 77 trillion won) in investment over the next 15 years. To return to the late 1990s level of producing 3 million barrels a day, $183 billion (about 265 trillion won) would need to be injected into the oil and gas institutional sector by 2040.
The investment will go into restoring Venezuela's aging infrastructure and refining and processing Venezuela's extra-heavy crude (high-viscosity crude with many impurities).
Such massive investment appears likely to be a burden for U.S. oil companies. As international oil prices fell 20% from a year earlier last year, oil companies have less room to invest in Venezuela.
In the global energy industry, there are expectations that Chevron, which has maintained operations in Venezuela so far, is likely to lead the rebuilding effort.
In 2006, former Venezuela President Chávez nationalized all oil-related assets. In response, many U.S. oil companies such as ExxonMobil and ConocoPhillips withdrew from Venezuela, and their asset was seized by the Chávez administration.
Chevron, by contrast, continued to keep its enterprise in place while cooperating with the Venezuela government. Ali Moshiri, who oversaw Chevron's operations in Venezuela at the time, said in an interview with the New York Times (NYT), "Under the contract signed with the Venezuela government in 2006, Chevron secured equity in Venezuela's key projects."
The NYT reported, "Chevron's decision to continue investing in Venezuela was once considered reckless, but the situation has now reversed," adding, "If Venezuela's political situation stabilizes in the future, Chevron will be able to expand its business in Venezuela with relative ease."