President Donald Trump on Saturday said the US would take control of Venezuela’s massive oil reserves and recruit American companies to invest billions of dollars to refurbish the country’s gutted oil industry.
Venezuela is sitting on a massive 303 billion barrels worth of crude — about a fifth of the world’s global reserves, according to the US Energy Information Administration (EIA).
A US-led revamp could eventually make Venezuela a much bigger supplier of oil and could create opportunities for Western oil companies and could serve as a new source of production. It could also keep broader prices in check, although lower prices might disincentivize some US companies from producing oil.
The kind of oil Venezuela is sitting on — heavy, sour crude — requires special equipment and a high level of technical prowess to process.
The United States, the world’s largest oil producer, has light, sweet crude, which is good for making gasoline but not much else. Heavy, sour crude like the oil from Venezuela is crucial for certain products made in the refining process, including diesel, asphalt and fuels for factories and other heavy equipment.
Unlocking Venezuelan oil could be particularly beneficial to the United States: Venezuela is nearby and its oil is relatively cheap.
Venezuela is home to the largest proven oil reserve on Earth, but its potential far outweighs its actual output: Venezuela produces only about 1 million barrels of oil per day — about 0.8% of global crude production.
International sanctions on the Venezuelan government and a deep economic crisis contributed to the decline of the country’s oil industry — but so did a lack of investment and maintenance, according to the EIA.
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