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Energy analysts have expressed considerable caution regarding optimistic predictions that US energy majors will quickly invest tens of billions of dollars to fix Venezuela's dilapidated production facilities.

Requirement of Iron-Clad Protections

Without an solid promise of financial backing from the Washington, experts believe international firms to proceed with extreme caution.

“It would be too early to discuss any future business activities,” a representative commented recently.

The ambitious schedule of less than 18 months was publicly outlined. Yet, industry projections paint a longer timeline.

A Probable Schedule

“It’s probably going to take three years for any kind of production bounce,” said an chief investment officer.

The analysis indicates oil companies would likely spend:

• The first year: Navigating new operating agreements.
• Year two: Commencing rebuilding of facilities.
• Final phase: Being able to boost production.

This would lead to an boost of around half a million barrels per day perhaps by the end of the decade.

Appetite Compared to Appetite for Risk

Analysts draw a important separation between multinationals’ interest and their willingness to spend heavily.

“In my view their curiosity is an high score, on a scale of ten. But their appetite is a four or five, because there is a lack of certainty yet.”

Veteran diplomats in the country share this caution. The thinking is that majors will publicly talk up the opportunity while in practice moving with great care.

The Vast Cost

The monetary outlay would be vast. Research estimates suggest that adding between 500,000 and a million barrels per day would require in excess of $10 billion in capital spending over several years.

However, returning output to previous levels of around 2.5 million bpd could require a massive $80 billion to $90 billion over six or seven years.

The Pending Issue of Taxpayer Funding

The prospect of energy companies being paid back by the federal government has been often raised. But, formal assurances on such a mechanism have so far not been announced.

Without certainty is the key reason behind the industry's hesitation. Firms seek safeguards against political risk and the risk that a subsequent president could refuse any deal.

“They must be shielded from nationalization, that we’ve witnessed in Venezuela before.”

Therefore, while rhetorical optimism runs high, the practical challenges suggest a path of extreme caution for any significant venture in the Venezuelan energy industry.