US Pushes for Quickest Fixes to Boost Venezuela Oil Output

Bloomberg reports US Pushes for Quickest Fixes to Boost Venezuela Oil Output

The US is in talks with Chevron Corp., other crude producers and the world's biggest oilfield service providers about a plan to quickly revive output in Venezuela at a fraction of the estimated $100 billion cost for a complete rebuilding.

Oilfield contractors such as SLB Ltd., Baker Hughes Co. and Halliburton Co. would focus their initial efforts on repairing or replacing damaged or outdated equipment and refreshing older drilling sites, according to senior administration officials who asked not to be identified discussing internal plans.

The idea is that with limited investment, Venezuela could boost production by several hundred thousand barrels over the short term, the people said.

The go-fast approach is designed to fulfill the Trump administration's goal of swiftly increasing crude flows in the wake of the US capture of Venezuelan strongman Nicolas Maduro, generating cash that could be used to help pay for rebuilding the country. Longer term, President Donald Trump's goal remains an industry revival that would bring output closer to the country's 1970 peak of roughly 3.75 million barrels per day from current production of less than 1 million.

While analysts say achieving that bigger prize will take at least a decade, there's plenty of production gains to be had in the near term.

"There's some low-hanging fruit that you could probably squeeze some life out of once again," said Tom Liskey, who heads up Latin American research at industry consultant Enverus.

A representative for Halliburton said its goal in Venezuela "is to achieve quick wins and generate immediate production recovery." Representatives for SLB didn't immediately respond to messages seeking comment. Baker Hughes declined to comment.

Venezuelan crude sales will make money for both countries and "bring down oil prices even further," Trump told reporters on Air Force One on Thursday. "We are drilling more oil than at any time in the history of our country, by far. If you add Venezuela to it, it's a tremendous part of the market."

Bringing state-of-the-art US equipment and techniques to Venezuela — where the oil industry has been throttled by years of sanctions — can revitalize existing wells and bring new production online within months, the Trump administration officials said. Some analysts have underestimated how dramatically operations could improve under free-flowing, regular relations, one of the people said.

Even so, the country's existing infrastructure has been plagued by decades of underinvestment and neglect — including in once-prolific areas in the east and around Lake Maracaibo where oil was first discovered a century ago. Environmental liabilities from years of oil spills and jury-rigged installations are another challenge.