UNITED States President Donald Trump has announced that Venezuela will turn over between 30 and 50 million barrels of sanctioned oil.
Trump said the oil, held in storage due to Washington’s embargo on Venezuela exports, would be sold at market prices and that he would control the resulting revenues to ensure the money is used to benefit the people of Venezuela and the US.
Trump added that he had directed his energy secretary, Chris Wright, to execute the plan “immediately”.
“It will be taken by storage ships, and brought directly to unloading docks in the United States,” Trump said on his platform, Truth Social, on Tuesday.
Trump’s announcement follows his pledge to “take back” Venezuela’s oil reserves and revive the Latin American country’s flailing energy industry in the wake of his administration’s abduction of Venezuelan President Nicolas Maduro.
Trump has said that US oil companies are primed to invest billions of dollars to rebuild Venezuela’s decrepit infrastructure and exploit its oil reserves, which he has falsely asserted were “stolen” from the US.
The US has no claim of ownership to Venezuela’s oil under international law, though the late Hugo Chavez did seize property belonging to American firms as part of his nationalisation of the sector.
Chervon, Exxon Mobil and ConocoPhillips – the three biggest US oil companies – have not directly commented on Trump’s plans, but representatives of the firms are set to meet the president on Friday to discuss Venezuela, according to US media reports.
In the context of the global market, 50 million barrels per day (bpd) would represent only a modest addition to supply.
Global consumption exceeds 100 million bpd, and the US alone produces about 14 million bpd.
Mark Finley, an energy expert at the Baker Institute in Houston, Texas, said that it was difficult to parse the significance of Trump’s announcement without further details.
“Thirty to 50 million barrels over what time frame? That’ll be key to assessing the significance of this,” Finley told Al Jazeera.
“In a month, that’s essentially all Venezuelan output. In a year, it’s pretty small.”
Scott Montgomery, an expert on the global energy sector at the University of Washington, said Trump’s comments about controlling oil revenues only added to the uncertainty surrounding his administration’s plans.
“I have no real idea about how Trump might distribute the cash. There’s not much of a precedent for this kind of thing, to say the least, at least not in the US,” Montgomery told Al Jazeera.
Analysts say restoring Venezuela’s production to anything close to its 1990s peak of more than three million bpd would require massive investment and could take years.
Venezuela’s oil sector would need capital investment of about $110bn to return to output of about two million bpd, according to an estimate by Rystad Energy, a Norway-based consultancy.
“A significant amount of upfront scientific and engineering work has to be done to understand the condition of the productive reservoirs – these have changed over time, with key properties altered,” Montgomery said.
Some market watchers are sceptical that US companies will commit to large investments in the country, given their experiences of asset seizures under Chavez and the glut of oil in the global market.
ExxonMobil and ConocoPhillips were awarded $1.6bn and $8.7bn, respectively, in international arbitration following the Chavez government’s nationalisation of the country’s last privately-operated oil fields in 2007. Venezuela’s government did not pay out in either case.
Chevron is the only major US oil company still operating in Venezuela, producing about 150,000 bpd.
Venezuela once ranked among the world’s top oil producers, but US sanctions and years of underinvestment, mismanagement, and corruption under Maduro and Chavez reduced the sector to a shadow of its former self.
While the Latin American country holds the largest known oil reserves, its current output accounts for less than 1 percent of global supply.