US President Donald Trump announced that Venezuela would hand over 30 million to 50 million barrels of sanctioned oil.
President Trump said he would manage to ensure that crude oil stored under the U.S. embargo on Venezuelan exports would be sold at market prices and that the funds would be used for the benefit of the people of Venezuela and the United States.
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Trump added that he has directed Energy Secretary Chris Wright to implement the plan “immediately.”
“It will be transported on a storage ship and transported directly to a loading dock in the United States,” President Trump said on his Truth Social platform on Tuesday.
President Trump’s announcement follows his pledge to “reclaim” Venezuela’s oil reserves and revive Latin America’s energy industry, which has been in decline following his regime’s abduction of Venezuelan President Maduro.
President Trump has said that U.S. oil companies are willing to invest billions of dollars to rebuild Venezuela’s aging infrastructure and develop its oil reserves, which he falsely claims were “stolen” from the United States.
Although the United States does not claim ownership of Venezuelan oil under international law, the late Hugo Chávez seized the assets of American companies as part of his efforts to nationalize the sector.
The three largest U.S. oil companies, Charbon, ExxonMobil and ConocoPhillips, have not commented directly on Trump’s plans, but U.S. media reports say their representatives will meet with the president on Friday to discuss Venezuela.
In the context of the global market, 50 million barrels per day (bpd) is only a small increase in supply.
World consumption exceeds 100 million barrels per day, and the United States alone produces approximately 14 million barrels per day.
Mark Finley, an energy expert at the Baker Institute in Houston, Texas, said it was difficult to understand the significance of Trump’s announcement without more details.
“30 million to 50 million barrels over how long? That will be the key to assessing the significance of this,” Finley told Al Jazeera.
“In a month, that’s essentially what Venezuela produces. In a year, it’s much less.”
Scott Montgomery, a global energy expert at the University of Washington, said Trump’s comments about managing oil revenues only add to the uncertainty surrounding his administration’s plans.
“I have no idea how Trump will distribute the cash, to say the least, there isn’t much precedent for this kind of thing, at least not in the United States,” Montgomery told Al Jazeera.
Analysts say bringing Venezuela’s output back to its 1990s peak of more than 3 million barrels a day will require huge investments and could take years.
Norway-based consultancy Rystad Energy estimates that Venezuela’s oil sector will need about $110 billion in capital investment to return to production of about 2 million barrels per day.
“A significant amount of scientific and engineering work needs to be done up front to understand the conditions of producing reservoirs. They change over time, and so do their key properties,” Montgomery said.
Some market participants are skeptical that U.S. companies will make large-scale investments in the country, given the experience of asset seizures under Chávez and an oversupply of oil on global markets.
ExxonMobil and ConocoPhillips were awarded $1.6 billion and $8.7 billion, respectively, in international arbitration after the Chávez government nationalized the country’s last private oil fields in 2007. The Venezuelan government did not pay in either case.
Chevron is the only major U.S. oil company still operating in Venezuela, producing about 150,000 barrels per day.
Venezuela once ranked among the world’s top oil producers, but U.S. sanctions and years of underinvestment, mismanagement and corruption under Maduro and Chávez have left the sector a shadow of its former self.
This Latin American country has the largest known oil reserves, but current production accounts for less than 1% of the world’s supply.
