🔗 Share this article

Industry experts have shown significant caution regarding optimistic claims that US oil giants will rapidly pump tens of billions of dollars to rebuild the country's broken energy sector.

The Need for Iron-Clad Protections

Without an “iron-clad guarantee” of full reimbursement from the Washington, specialists predict multinational oil companies to move with great care.

“It seems too early to comment on any upcoming plans,” a spokesperson said recently.

The ambitious timeframe of less than a year and a half has been boldly suggested. Nevertheless, realistic assessments suggest a different picture.

A More Realistic Schedule

“Chances are going to take 36 months for any meaningful production bounce,” commented one chief investment officer.

Experts believe oil companies would likely spend:

• Initial phase: Securing new regulatory frameworks.
• Year two: Commencing rebuilding of equipment.
• Final phase: Reaching a position to meaningfully increase production.

This would lead to an increase of around half a million bpd possibly by the end of the decade.

Desire Versus Appetite for Spending

Experts make a critical difference between companies' curiosity and their willingness to spend heavily.

“I think their curiosity is an high score, on a range of ten. But their willingness is a mid-range score, because there is no clarity yet.”

Veteran operators in the region echo this view. The thinking is that companies will publicly call it fantastic while actually moving with deliberate slowness.

The Colossal Price Tag

The monetary outlay would be vast. University analysis suggest that increasing production by between half a million and a million bpd would require over $10 billion in capital spending over two to three years.

However, returning production to previous levels of around 2.5 million bpd could require a massive $80 billion to $90 billion over six or seven years.

The Outstanding Issue of Federal Guarantees

The prospect of firms being compensated by the federal government has been often floated. But, formal assurances on this proposal have so far not been provided.

The absence of certainty is the key factor for the sector's reluctance. Companies seek protection against sovereign risk and the chance that a future president could cancel any agreement.

“They must be shielded from nationalization, that we’ve experienced in Venezuela previously.”

In summary, while rhetorical promises runs high, the operational risks suggest a road of measured steps for potential significant investment in the country's oil sector.