Industry experts have voiced significant doubt regarding recent statements that US large firms will quickly commit billions of dollars to revive the country's broken production facilities.
The Need for Iron-Clad Protections
Absent an solid promise of full reimbursement from the Washington, experts believe multinational oil companies to proceed with significant hesitation.
“It would be too early to comment on any upcoming plans,” a representative stated recently.
The aggressive schedule of less than 18 months was publicly outlined. However, expert analyses indicate a more cautious outlook.
A More Realistic Timeline
“Chances are going to take multiple years for any significant recovery in production,” said one chief investment officer.
Experts believe energy firms would likely spend:
- The first year: Sorting through new government and security contracts.
- The second year: Investing in overhaul of equipment.
- Final phase: Being able to boost yield.
The result could be an rise of around half a million barrels per day possibly by the end of the decade.
Desire Versus Readiness for Risk
Analysts draw a important separation between companies' curiosity and their readiness to commit significantly.
“In my view their interest is an high score, on a range of one to 10. I think their readiness is a four or five, because there is significant uncertainty yet.”
Seasoned observers in the region echo this view. The thinking is that companies will politically express enthusiasm while in practice acting with great care.
The Colossal Cost
The monetary investment would be vast. Independent analysis suggest that adding between half a million and a million bpd would require in excess of $10 billion in investment over two to three years.
However, rebuilding output to peak levels of around 2.5 million barrels per day could require a massive $80 billion to $90 billion over many more years.
The Outstanding Question of Federal Guarantees
The idea of firms being compensated by the US taxpayer has been often mentioned. Nevertheless, specific plans on any guarantee have not yet been announced.
This lack of certainty is the main reason for the sector's reluctance. Firms seek protection against sovereign risk and the chance that a subsequent government could refuse any promise.
“You need to be shielded from nationalization, that we’ve experienced in Venezuela already.”
In summary, while rhetorical optimism runs strong, the financial risks suggest a path of slow deliberation for potential significant financial commitment in the country's oil sector.
