Trump Wants to Use Venezuela's Oil, But It's Hard

President Trump wants to help Venezuela's oil industry. However, the country's oil equipment is old and broken. Also, there is too much oil in the world right now. Experts say fixing this will take a lot of time and money.
By Newsroom | Politics, Business |

US President Donald Trump has expressed intentions to visit Venezuela and has outlined a plan to revitalize the nation's oil industry, aiming to secure vast reserves for American producers. This move follows the recent seizure of Venezuelan President Nicolás Maduro. While Trump frames this as a significant business opportunity, reports indicate substantial obstacles, including the damaged state of Venezuela's oil infrastructure, questions about reserve quality and quantity, and a current global oil surplus. The United States has also waived certain oil sanctions, permitting major oil companies to operate in the country.

Trump eyes Venezuela visit – but obstacles to his oil plan remain - 1

Context of the Venezuela Oil Situation

In December, President Trump oversaw the seizure of Venezuelan President Nicolás Maduro, citing allegations of drug trafficking and other crimes. Shortly after, Trump announced his intention to tap into Venezuela's oil reserves, which are reported to be the world's largest.

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Trump eyes Venezuela visit – but obstacles to his oil plan remain - 2

  • Timeline of Events:

  • December [Year]: Donald Trump oversees the seizure of Venezuelan President Nicolás Maduro.

  • January 3 [Year]: Energy Secretary Chris Wright, a high-ranking US official, visits Venezuela and meets with interim leader Delcy Rodriguez.

  • Early January [Year]: US administration authorizes five major oil companies to operate in Venezuela.

  • February 13 [Year]: Trump states his intention to visit Venezuela.

  • Key Actors:

  • Donald Trump: US President, proposing to revitalize Venezuela's oil industry.

  • Nicolás Maduro: Venezuelan President, recently seized.

  • Delcy Rodriguez: Interim leader of Venezuela, praised by the Trump administration for cooperation.

  • Chris Wright: US Energy Secretary, visited Venezuela.

  • PDVSA: Venezuela's state-owned oil company, reportedly diminished.

Evidence of Challenges and Opportunities

Multiple reports highlight the disparity between Trump's ambitions and the on-the-ground realities of Venezuela's oil sector.

Trump eyes Venezuela visit – but obstacles to his oil plan remain - 3

  • State of the Industry: Venezuela's state-owned oil company, PDVSA, is described as a "shadow of its former self" (Article 1, 2). Much of the country's oil infrastructure is in disrepair, with tattered facilities and broken pipelines reported (Article 7). Years of economic turmoil, corruption, and sanctions have "decimated" the industry (Article 5).

  • Reserve Quality and Quantity: While Venezuela possesses the world's largest proven oil reserves (Article 3), there are "doubts over the true size" (Article 1, 2). Furthermore, Venezuela's oil is described as being of "poorer quality" than Saudi oil (Article 1, 2).

  • Global Market Conditions: A significant "surplus of oil on the global market" is noted, which could dampen the immediate impact of increased Venezuelan production on prices (Article 3, 6).

  • US Action: The US has "waived Venezuela oil sanctions" to allow operations, signaling a strategic shift (Article 4). Trump's administration characterizes Washington as controlling Venezuela's oil resources for the foreseeable future (Article 4).

Obstacles to Trump's Oil Plan

The path to realizing Trump's vision for Venezuelan oil is fraught with considerable difficulties.

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Trump eyes Venezuela visit – but obstacles to his oil plan remain - 4

  • Infrastructure Decay: The physical assets required for oil extraction and processing are in a severe state of disrepair. Reports indicate a "tattered infrastructure" and broken pipelines (Article 7), suggesting that extensive and costly repairs will be necessary.

  • Economic and Political Instability: Decades of economic hardship and political turmoil have left the oil industry weakened. Political instability remains an obstacle to reviving Venezuela's oil industry (Article 5). This instability could deter the large-scale investment required for revitalization.

  • Market Saturation: The current global oil market is characterized by a surplus. This means that even if production is ramped up, it may not significantly alter global prices in the short term, potentially limiting the economic incentive for rapid intervention (Article 3, 6).

  • Quality Concerns: The quality of Venezuela's oil is reportedly lower than that of other major producers, which could affect its marketability and the types of refining capabilities needed (Article 1, 2).

Potential Geopolitical Shifts

The US's engagement with Venezuela's oil sector could reshape the global energy landscape.

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  • Western Hemisphere Focus: With Washington exerting leverage over oil production from Canada to Guyana and Venezuela, encompassing nearly 20 percent of global oil supply, the "balance of power in global energy markets could start tilting westward" (Article 8).

  • Impact on Middle Eastern Producers: This shift may be "deeply unsettling for Arab Gulf producers" (Article 8), potentially altering established energy trade dynamics and requiring adjustments from these key suppliers.

Expert Perspectives on Feasibility

While President Trump claims the US will "fix" Venezuela's oil industry, experts express caution regarding the ease and speed of such a turnaround.

"Experts say boosting Venezuela’s oil production to levels not seen in decades will be neither easy nor cheap." (Article 5)

"The problem isn't finding the oil." (Article 6)

Experts highlight that boosting production will be a complex and expensive undertaking (Article 5), requiring substantial investment to overcome the existing challenges. The current global oil surplus also suggests that any immediate impact on prices may be limited (Article 3, 6).

Conclusion and Implications

President Trump's plan to revive Venezuela's oil industry, while presented as a significant opportunity, faces profound and complex challenges. The severely degraded state of the nation's oil infrastructure, coupled with lingering questions about reserve quality and the current global oil surplus, presents formidable obstacles. The US government's actions, including waiving sanctions and authorizing oil companies to operate, indicate a strategic intent to leverage these resources.

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However, experts warn that revitalizing Venezuela's oil sector will be neither easy nor cheap, demanding significant investment and time. The implications of the US asserting greater control over Venezuelan oil could extend beyond bilateral relations, potentially reshaping global energy markets and the balance of power among major oil-producing nations. The feasibility of Trump's ambitions hinges on overcoming deep-seated infrastructural damage, economic instability, and unfavorable market conditions.

Sources Used:

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Frequently Asked Questions

Q: What does President Trump want to do with Venezuela's oil?
President Trump wants to help Venezuela fix its oil industry so the US can use its oil.
Q: Is Venezuela's oil industry in good shape?
No, much of Venezuela's oil equipment is old and broken. It needs many repairs.
Q: Are there other problems with this plan?
Yes, there is already a lot of oil available worldwide, and Venezuela's oil might be of lower quality.
Q: Will this plan be easy to do?
Experts say it will be very hard and cost a lot of money to fix Venezuela's oil industry.