Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
President Donald Trump likes the idea of “very large” US oil companies going into Venezuela, investing billions of dollars and getting the oil flowing again. The companies themselves have reason to be less keen: for them, Venezuela’s resources could prove costly and disruptive.
It is true, of course, that Venezuela could be a much bigger force on global oil markets than it is today. It holds roughly a fifth of the world’s total reserves, but accounts for less than 1 per cent of daily barrels produced — and its rate of production is less than a third of what it was in the late 1990s.
China, too, may have been a factor in Trump’s thinking. While Venezuelan oil made up just 300,000 of the 11.3mn barrels China imported each day in 2024 and 2025, according to the Oxford Institute of Energy Studies, companies from the People’s Republic had gained a foothold in Venezuela’s oil-drilling industry.
But returning Venezuela’s production to historic levels will be challenging. The country’s reserves are mostly concentrated in the Orinoco Belt. Extracting this extra-heavy oil requires drilling lots of relatively shortlived wells — a process quite similar to US shale oil production — then mixing the sludge with lighter oil or naphtha so it can flow through pipelines before being exported and refined.
For a country already short of serviceable infrastructure, that will entail huge investments. Jorge León from Rystad Energy estimates that roughly doubling production to 2mn barrels by the early 2030s will cost $115bn — some three times ExxonMobil and Chevron’s combined capital expenditure last year.
Companies will not want to put anything like that sort of money at risk until there is visibility on Venezuela’s future. Moreover, they would be wise to demand contracts paid directly in oil rather than by the country’s heavily indebted national oil company PDVSA — with which foreign drillers previously had to partner by political decree.
Consider, too, what sort of a return companies might expect to make from these investments. The cost of producing Venezuelan heavy oil is likely to be relatively high, at least initially. And because of how hard it is to refine it, it will need to be sold at a discount of perhaps 10 to 15 per cent to already low benchmark oil prices.
There is a further sting in the tail. Imagine that the likes of Exxon and Chevron jump through all the necessary hoops, and that Venezuela adds a million or more barrels to oil supply into the 2030s. More than expected oil without more than expected demand is likely to mean lower prices. And the so-called swing producer left under pressure from that shift could be the US itself.
Trump, who wants the US to drill like crazy, presumably has no desire to hurt US oil companies. But some American shale patches already face costs higher than current oil prices, economics that may deteriorate as the most favourable areas are exhausted. A gusher of Venezuelan oil stands to make that worse. Play reckless games, win dangerous prizes.