When Donald Trump forced regime change on Venezuela by removing and arresting their president, Nicholas Maduro, and seizing control over their petroleum industry, he aimed to “run” the industry in order to straighten out all its problems. Sounds like a noble cause considering the condition the industry was in, but what’s the cost going to be and what’s the end game going to look like?
Who Wants to Invest in Venezuela’s Oil Future?: After the takeover, Trump said that America would need to “spend billions of dollars, fix the badly broken infrastructure…and start making money for the country.” Indeed, the run-down industry would need an influx of capital to get its output back up to where it used to be. But his plans to “run” the country’s major export business depend on financial involvement of American Oil companies who have the technical expertise to fix the problems, upgrade the infrastructure, and keep the oil flowing. Although some buzz has been generated by smaller operators looking for a share of the bounty, the only major company to show any real interest is Chevron—the last American company to operate in Venezuela discontinuing its presence there in May, 2025. The reluctance on the part of other big oil companies may stem from eighteen years ago when former Venezuelan President Hugo Chavis chose to nationalized all assets belonging to foreign owners, causing a number of U.S. companies to lose fortunes. The very idea that the U.S. government conducted a regime change and virtually confiscated the oil industry from the Venezuelans may further provide the rank and file of U.S. big oil companies with enough reason to stay away.
How Much Investment Would be Necessary to Increase Venezuela’s Oil Output?: The complete extent of just how much money it would take to increase Venezuela’s oil output to the point that it could manage to maintain its infrastructure and satisfy its obligations is not at all clear. The best guess, $110 billion over four years, comes via Rystad Energy, an industry consulting firm. According to Trump, this new arrangement forced upon Venezuela by the U.S. would result in from 30 million to 50 million barrels of crude oil (about $3 billion value) being transferred to U.S. refineries, with the product marketed by U.S. companies and the proceeds deposited into bank accounts controlled by the U.S. government. The investments needed to turn things around for the oil industry also need to include a training institute for Venezuelans to become proficient enough to run the industry themselves from a technical standpoint. Many thousands of qualified oil industry technicians, engineers, and geologists, have left the country creating a major shortage of brain power for PDVSA (Venezuela’s government owned oil company). As a result, PDVSA has had to draw on the military for personnel to fill rolls which were vacated by more qualified individuals. Such a turnaround could take years or even decades to bring PDVSA (about 70,000 employees) up to the speed it would need to run a successful oil industry independently. The amount of decay in the overall industry runs so deep that smaller operators could do well to reopen some of the oil wells in the Orinoco River area that have been abandoned as dry holes. There are even assets in the U.S. that would benefit: Citgo, a U.S. based refinery engineered specifically to process Venezuela’s heavy oil, was sold at auction to a hedge-fund that could capitalize on Citgo’s rehabilitation. However, most of the U.S. big oil companies appear reluctant to get involved. If a settlement could be reached for their confiscated properties, that situation may change.
Venezuela’s Debts are a Crushing Burden to the Country: Venezuela’s government owes its creditors about $95 billion, or about 115% of its entire GDP. The largest group of creditors are the bondholders who are owed approximately $60 billion including accrued interest. Restructuring this part of the debt would be necessary, and just the idea that restructuring may occur pushed the value of Venezuela’s bonds up from $0.33 to $0.43 cents per dollar. The country’s repayment record over the last decade is dismal and needs to be changed. Venezuela has defaulted on all but two of its loans to outside entities since 2017, and has not paid one dime of what it owes to any foreign creditor since 2018. Another category of creditor exists, however, and this one may be harder to satisfy—China. Venezuela owes nearly all of its bilateral debt—about $16.5 billion—to China, who lent Venezuela $60 billion in 2007 with a proviso that China would receive oil shipments at a special discounted price in lieu of repayment. However, that deal was made by the late Hugo Chavez, and it is not clear if the present or future Venezuelan governments will choose to honor it. Restructuring a deal like that could also be tricky as China has never restructured any other foreign debt under similar default circumstances. It must further be noted that Venezuela is currently short of cash, and needs time and patience from its creditors to manage the array of debts that stares it in the face.
How Will the Product Fare in the Marketplace?: Venezuela possesses about 20% of the entire world’s petroleum reserves, but most of this amount is of the heavy oil variety that contains various pollutants and is thick in viscosity. This extra heavy crude requires naphtha, a hydrocarbon solvent, to facilitate transporting, and the cracking process that breaks crude oil down into its various component products. A major source of naphtha comes from Russia, and the sanctions, blockades, and other geopolitical activities owing to its invasion of Ukraine have worked to hamstring Russian oil output and hamper naphtha supply replenishment. To process heavy oil into the assortment of products for which there is demand, special cracking equipment and facilities are required. This capacity is not found in every refinery in America, although perhaps as many as twenty out of a total of thirty-one refineries could be set up to use heavy oil as a raw material. Owing to the sanctions, blockades, and other geopolitical actions, the supply chains for Venezuelan petroleum products have been disrupted if not destroyed completely. But in a world that still requires a major daily consumption of petrochemical fuels, new supply chains could be reconnected. The industry costs that apply to the extraction, transport and refining of Venezuelan heavy crude can run as high as $75 or more per barrel. That means that a market price of $80 or more per barrel would be required to provide an adequate return. How many barrels of production would that take to repay $95 billion in debts and recoup $110 billion dollars in investments from the revamped industry? The projected output would be estimated to be about 1.8 million barrels per day. Although this output and all related costs could vary widely from day to day and year to year, let’s assume an overall net margin of $5 per barrel. With that in mind it could conceivably take over 65 years to recoup the entire investment including the debts—and that’s an optimistic estimate. Why? Most petrochemical projects in the Venezuelan sphere are not considered bankable unless the product can be sold for at least $80 per barrel. The prices of crude worldwide have hovered mainly in the $60 per barrel range over the last several years owing to different geopolitical issues, namely the Russia-Ukraine war. Any major upgrading could take another ten years to complete pushing the risks out further as overall consumption of fossil fuels is expected to decrease in the future. And finally, it is nearly impossible to understand just exactly what Trump has in mind for the future of the Venezuelan industry. He typically does not do things of this nature to benefit the general welfare of any society.
Conclusions: So, what do we have now with all of this? We have a huge, expensive project that will take place in a potentially hostile environment, take many years to complete, and cost many billions of dollars, and only one U.S. oil company (Chevron) has signed up to participate. The project costs should be included with the astronomical debt that Venezuela must address through restructuring. The worldwide price of oil needs to be at least $80 per barrel make enough money to gain any ground on the debt repayment, and that could take over sixty-five years to accomplish. And finally, the person calling the shots on this activity, Donald Trump, was never an oilman, and has a reputation for keeping investors confused about his intentions and direction.
Sources: The Economist, Crude Vision, January 10, 2026.
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