Energy analysts have expressed considerable skepticism regarding optimistic predictions that US large firms will swiftly pump billions of dollars to fix the country's dilapidated oil infrastructure.
Demand for Absolute Guarantees
Without an solid promise of financial backing from the Washington, experts believe multinational oil companies to move with extreme caution.
“It would be too early to comment on any future business activities,” an official said recently.
The aggressive schedule of less than a year and a half has been boldly outlined. Yet, expert analyses paint a longer timeline.
A More Realistic Timeline
“It is likely going to take three years for any significant recovery in production,” commented one energy analyst.
He suggested oil companies would likely spend:
- The first year: Navigating new operating agreements.
- Following phase: Commencing overhaul of infrastructure.
- The third year: Being able to significantly ramp up production.
The result could be an increase of around 500,000 barrels per day maybe by 2029.
Interest vs. Appetite for Investment
There is a important separation between multinationals’ interest and their willingness to spend heavily.
“I believe their interest is an eight, on a scale of ten. I think their readiness is a much lower, because there is a lack of certainty yet.”
Experienced operators in the region reinforce this caution. The thinking is that firms will publicly talk up the opportunity while actually proceeding with great care.
The Colossal Investment Required
The financial investment would be colossal. Independent projections suggest that adding between 500,000 and a million barrels per day would require in excess of $10 billion in investment over two to three years.
Yet, returning production to previous levels of around 2.5 million barrels per day could require a staggering $80 billion to $90 billion over many more years.
The Pending Question of Government Backing
The idea of oil giants being paid back by the government has been repeatedly raised. However, concrete details on this proposal have not yet been announced.
The absence of certainty is the main impediment behind the sector's caution. Firms seek protection against nationalization and the risk that a different president could renege on any deal.
“You need to be insured against political change, that we’ve experienced in Venezuela previously.”
Ultimately, while political promises runs strong, the practical risks suggest a path of measured steps for any significant financial commitment in the country's energy industry.
