Industry experts have voiced considerable skepticism regarding recent claims that US large firms will rapidly pump tens of billions of dollars to fix the country's broken production facilities.
Requirement of Solid Protections
Without an absolute assurance of financial backing from the US federal government, analysts expect international firms to act with significant hesitation.
“It would be hasty to comment on any potential investments,” a representative stated in response.
The ambitious timeframe of less than 18 months has been boldly suggested. Yet, expert analyses paint a more cautious outlook.
A Probable Outlook
“Chances are going to take three years for any meaningful recovery in production,” said an energy analyst.
Experts believe oil companies would likely spend:
- Year one: Securing new operating agreements.
- The second year: Beginning overhaul of facilities.
- Year three: Being able to boost output.
The result could be an boost of around 500,000 bpd maybe by 2029.
Appetite Compared to Appetite for Investment
There is a important separation between firms' attention and their readiness to commit significantly.
“In my view their curiosity is an high score, on a range of ten. But their willingness is a four or five, because there is no clarity yet.”
Seasoned observers in the region reinforce this caution. The expectation is that companies will politically talk up the opportunity while privately acting with extreme caution.
The Vast Cost
The monetary investment would be enormous. Independent projections suggest that increasing production by between half a million and a million bpd would require in excess of $10 billion in capital spending over two to three years.
Yet, restoring output to historical levels of around 2.5 million barrels per day could require a staggering $80 billion to $90 billion over six or seven years.
The Unanswered Issue of Federal Guarantees
The suggestion of oil giants being compensated by the government has been often mentioned. However, formal assurances on any guarantee have so far not been provided.
Without certainty is the main impediment behind the industry's caution. Firms seek safeguards against nationalization and the risk that a future president could refuse any promise.
“They must be shielded from nationalization, that we’ve experienced in Venezuela previously.”
In summary, while rhetorical optimism runs high, the operational risks suggest a road of slow deliberation for potential significant financial commitment in the country's energy industry.