Hours after the U.S. military captured Venezuelan president Nicolás Maduro, President Trump made it clear that the U.S. operation is about — at least in part — control of Venezuela's oil.
"We're going to have our very large U.S. oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country," Trump said during a press conference Saturday.
The capture of Maduro and Trump's comments comes at a time when even a country like Venezuela — with one of the biggest oil resources in the world — isn't a sure bet for attracting major oil companies.
Many oil companies have been bruised by their past experiences operating in the country. The global oil market is currently facing an oversupply. Oil prices are below $60 a barrel, and long-term projections for oil demand are unclear as the world shifts to more electric vehicles.
Trump promises to "run the country" and make way for U.S. oil companies in Venezuela. However, there's a long history of U.S. interventions in Latin America and the Middle East not going well, oil experts tell NPR.
Here's what you need to know about Venezuela's oil.
Venezuela has huge oil reserves, but now produces a fraction of what it used to
Venezuela was once one of the biggest global oil producers and was one of the main founders of the Organization of Petroleum Exporting Countries (OPEC), a group of some of the world's biggest oil producers, whose decisions help determine global oil prices. Venezuela has the largest proven reserves of oil in the world, according to OPEC.
But while the country was producing more than 3 million barrels a day a few decades ago, today Venezuela produces only about a million barrels a day, or roughly 1% of global oil output. The U.S. produces about 13 million barrels a day.
Much of Venezuela's oil went to refineries in the U.S. Now much of it goes to China.
Not all crude oil is the same — some oil is physically lighter and easier for refineries to process. Venezuela's oil is heavy and dense, and requires special refineries. Burning any type of oil contributes to climate change, but Venezuela's oil is "among the dirtiest oils in the world to produce when it comes to global warming," says Paasha Mahdavi, associate professor of political science at the University of California, Santa Barbara.
Venezuela owes some U.S. oil companies billions
U.S. oil companies like Chevron began drilling in Venezuela about one hundred years ago and played a key role in developing the country's oil sector.
But around 2004 to 2007, then-President Hugo Chávez "basically forcefully renegotiated contracts" with international oil companies, says Francisco Monaldi, director of the Latin America Energy Program at the Center for Energy Studies at Rice University.
ExxonMobil and ConocoPhillips left the country in 2007 and then took the Venezuelan government to international arbitration courts. The courts ordered Venezuela to pay ConocoPhillips over $10 billion and ExxonMobil over $1 billion. Venezuela has only paid a fraction of those sums to ExxonMobil and to ConocoPhillips.
Chevron, however, stayed in Venezuela — although " they didn't like it," says Gerald Kepes, president of Competitive Energy Strategies, an energy consultancy in Washington, D.C.
Chevron today produces about a quarter of Venezuela's oil.
In response to the news of Maduro's capture, Chevron spokesperson Bill Turenne said in an email, "Chevron remains focused on the safety and wellbeing of our employees, as well as the integrity of our assets. We continue to operate in full compliance with all relevant laws and regulations."
Trump has said that Venezuela has "stolen" U.S. investment in the country's energy sector.
Will U.S. oil companies return?
Venezuela is what the oil industry calls a "brownfield" — meaning it's well established, and oil companies have a fairly good idea of what they will find when they drill. For companies like ConocoPhillips, returning to Venezuela could be an opportunity to recoup some of the billions owed to them by the government, Monaldi says.
In an email, ConocoPhillips spokesperson Dennis Nuss wrote, "ConocoPhillips is monitoring developments in Venezuela and their potential implications for global energy supply and stability. It would be premature to speculate on any future business activities or investments."
ExxonMobil did not respond to a request for comment.
Still, this isn't the best time to add to the global oil supply, Monaldi says. There's currently a worldwide glut of oil. Also, because Venezuela's oil is particularly bad for the climate, that makes it less attractive for European oil companies with climate goals, Monaldi says.
Venezuela's neighbor is a rising oil star
Next door to Venezuela is Guyana — a country that recently discovered over 10 billion barrels of oil and is a key emerging player in the international oil industry.
Guyana's oil is lighter than Venezuela's, less polluting, and has lower taxes than Venezuela, Monaldi says. There's also no national oil company in Guyana, as there is in Venezuela.
"All that makes for Guyana to be one of the most attractive oil places in the world," Monaldi says.
While ExxonMobil is no longer in Venezuela, it is a major player in Guyana.
For years, Venezuela and Guyana have had a territorial dispute that has also been related to oil rights. Last March, Venezuelan vessels entered Guyanese territorial waters approaching offshore oil vessels belonging to ExxonMobil.
"Without a doubt, with a changing regime, Guyana should feel more secure," Monaldi says.
Lack of political stability could be a deal breaker
Some increase in Venezuela's oil production could happen fairly quickly with more financial support and improved management, according to an analysis by Wood Mackenzie, an energy consultancy.
But Mahdavi says the Trump administration's plans to jumpstart the industry will be difficult. He notes that it took nearly two decades to revitalize Iraq's oil industry after the U.S. invasion, though corruption and mismanagement remain pervasive.
And ultimately, notes Kepes, if it's unclear who is in charge in Venezuela, oil companies will have concerns about the long-term viability of their contracts. "No one's going to start investing on the ground in a place where there's no legal contract and viable permission to operate or if there's concerns about political stability and violence," he says.
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