Industry experts have shown deep caution regarding recent claims that US energy majors will swiftly invest billions of dollars to rebuild the country's dilapidated oil infrastructure.
The Need for Absolute Protections
Without an solid promise of complete repayment from the Washington, specialists predict multinational oil companies to proceed with extreme caution.
“It would be premature to speculate on any upcoming plans,” a spokesperson commented this weekend.
The ambitious timeframe of less than a year and a half has been publicly outlined. Yet, expert analyses suggest a more cautious outlook.
A More Realistic Outlook
“Chances are going to take 36 months for any significant recovery in production,” said one energy analyst.
He suggested oil companies would likely spend:
- The first year: Securing new government and security contracts.
- Following phase: Beginning reconstruction of infrastructure.
- Year three: Starting to meaningfully increase production.
This would lead to an boost of around 500,000 bpd maybe by 2029.
Interest vs. Appetite for Risk
Analysts draw a critical difference between firms' attention and their willingness to spend heavily.
“I think their attention is an high score, on a scale of ten. I think their readiness is a four or five, because there is a lack of certainty yet.”
Veteran observers in the country share this caution. They believe that companies will publicly talk up the opportunity while privately moving with great care.
The Vast Price Tag
The required outlay would be vast. Independent projections suggest that adding between 500,000 and a million bpd would require more than $10 billion in investment over two to three years.
But, rebuilding production to historical levels of around 2.5 million bpd could require a monumental $80 billion to $90 billion over six or seven years.
The Pending Issue of Federal Guarantees
The prospect of oil giants being paid back by the government has been repeatedly mentioned. Nevertheless, concrete details on this proposal have so far not been forthcoming.
The absence of a solid plan is the key impediment for the sector's reluctance. Companies seek protection against nationalization and the chance that a future government could refuse any promise.
“They must be shielded from nationalization, that we’ve seen in Venezuela before.”
Therefore, while rhetorical promises runs high, the financial risks suggest a road of slow deliberation for any major investment in the country's oil sector.
