After President Donald Trump’s removal of Venezuelan socialist dictator Nicolás Maduro, the U.S. has emerged as the “master of the hemisphere” and is positioned to leverage the Latin American nation’s resources to outpace China, Russia and Canada in the coming years, energy sector experts told the Daily Caller News Foundation.
American energy companies essentially built and led innovation within the Venezuelan oil industry from the 1900s until the early 21st century, when former socialist dictator Hugo Chávez nationalized the industry. Chevron is now the only major U.S. company operating in Venezuela, and Trump’s move to “run” or otherwise influence the country creates new opportunities for oil development — a shift that some energy experts told the DCNF will shift geopolitics into Washington’s grip.
“The writing is on the wall. The U.S. is firmly in the driver’s seat,” The Heritage Foundation’s Chief Economist EJ Antoni told the DCNF, acknowledging that it will take time to revitalize the oil industry in Venezuela and pivot from Canadian oil imports. “Venezuela is being taken out of the Chinese orbit and from the Russian orbit and into that of the United States. … By boosting American strategic interests… you’ve simultaneously reduced Russian and Chinese strategic interests.”
Despite sitting on the world’s largest oil reserves, about 50% of Venezuelans live in extreme poverty. The administration and some economists like Antoni note that a revitalized Venezuelan oil industry partnered with the U.S. could lead to a mutually beneficial relationship.
Russia and China have collaborated and long sought influence in Venezuela, with an energy giant owned by the Russian state operating as a key partner in Venezuelan oil production, particularly after U.S. sanctions limited other buyers. The bulk of Venezuelan oil exports flowed to China in recent years.
In addition to vast petroleum and natural gas reserves, Venezuela sits on significant deposits of iron ore, bauxite, gold, diamonds and other rare earth minerals. Venezuela also hosts notable resources, and currently, Canada is the top supplier to the U.S. for forest products and lumber.
Canada’s exports to the U.S. have served as a large source of leverage in trade negotiations with America, Antoni told the DCNF.
“Now that that leverage is gone. It’s not gone overnight, but the writing is on the wall,” he said, adding that Venezuelan crude — like Canadian — is heavy and American refineries in Texas are built to process it. Importing oil from Venezuela via the Atlantic and Caribbean could be more cost-effective, particularly if the U.S. secures a discount, Antoni said.
The U.S. “is at this point, master of its own destiny and master of the hemisphere. And the Canadian government has to know that,” Antoni said.
“You’re going to see a massive amount of investment poured into the country,” Antoni told the DCNF, stating that this investment will allow companies to rebuild the run-down energy infrastructure. “That’s going to allow them to increase production, increase output, [and] is going to [lead to] more jobs for Venezuelans. It’s going to be much more income for the country. And American companies are going to reap part of those rewards as a result of their investment.”
Despite the optimism of the administration and other figures, some energy insiders stress that any revival of Venezuela’s oil industry would hinge on sweeping changes that have yet to materialize.
One industry source, granted anonymity to speak candidly, told the DCNF that Venezuela became almost the worst possible environment for investment after the nationalization of the oil industry and that a lot of uncertainty remains.
No major American oil companies have announced that they intend to expand oil development in Venezuela since Trump removed Maduro, and the president said Monday that if U.S. companies invest in Venezuela they may be reimbursed.
“There’s still so many unknowns,” Tim Stewart, president of the US Oil & Gas Association (USOGA), told the DCNF. “CEOs are being quiet because there’s too much uncertainty.”
David Blackmon, an energy and policy writer who spent 40 years in the oil and gas business, told the DCNF that “there’s just so many pitfalls to doing something like this that it’s hard to have any confidence.”
Antoni told the DCNF that when American oil companies modernized the Venezuelan industry, “their reward for their troubles was to have their physical property confiscated and their intellectual property copied. … They were simply and summarily kicked out of the country.”
Since American operators were effectively forced out of the Venezuelan oil industry, “investment has been anemic,” Antoni said, noting that production and exports have significantly fallen.
“If you want to revitalize the Venezuelan oil industry, it’s going to be U.S. operators who do it — but it’s going to take a long time,” Stewart told the DCNF, adding that “Venezuela’s oil machine wouldn’t exist were it not for U.S. operators” and that in the mid-2000’s, Chávez essentially threw out agreements with American companies, leaving them “with billions of dollars of stranded assets they couldn’t get out.”
Stewart noted that undeniable challenges lay ahead for a revitalized Venezuelan oil industry.
“There is Marxist decay that has eroded one of the most valuable global petroleum assets over the last 15 years,” Stewart said, though he cautioned, “don’t bet against this industry. We have the ability to solve some really hard technological problems and do it quickly.”
Despite the uncertainty, Blackmon told the DCNF that the oil “infrastructure is there. It’s going to need upgrading and modernization, but that can really cut down the timeline… we could be looking at substantial new production coming online within just a couple of years.”
Stewart added that while Venezuela is now a “shiny object,” the U.S. needs to remain focused on permitting reform to avoid the irony of it becoming easier to develop oil in Venezuela than in a U.S. state like Colorado.
“It will be an interesting five to ten years,” Stewart told the DCNF, noting that if the U.S. strikes a deal with the new Venezuelan government, a “fortress America” could emerge, ruling the crude market and forcing the rest of the world to respond to U.S.-driven market signals.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact [email protected].
