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Market specialists have shown significant doubt regarding optimistic claims that US energy majors will rapidly invest vast sums of dollars to rebuild the country's broken production facilities.

The Need for Solid Protections

Absent an solid promise of full reimbursement from the Washington, experts believe international firms to proceed with extreme caution.

“It is hasty to speculate on any upcoming plans,” a representative commented this weekend.

The aggressive timeframe of less than a year and a half has been publicly suggested. However, industry projections indicate a more cautious outlook.

A More Realistic Outlook

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

Experts believe oil companies would likely spend:

• Initial phase: Navigating new operating agreements.
• The second year: Investing in reconstruction of facilities.
• The third year: Being able to significantly ramp up yield.

This would lead to an increase of around 500,000 barrels per day perhaps by the end of the decade.

Appetite Compared to Appetite for Investment

Experts make a critical difference between firms' attention and their readiness to commit heavily.

“In my view their interest is an eight, on a scale of ten. I think their willingness is a four or five, because there is no clarity yet.”

Veteran diplomats in the sector share this caution. The thinking is that firms will publicly call it fantastic while privately proceeding with deliberate slowness.

The Enormous Cost

The financial outlay would be colossal. University analysis suggest that adding between half a million and a million bpd would require in excess of $10 billion in capital spending over several years.

But, rebuilding production to peak levels of around 2.5 million bpd could require a staggering $80 billion to $90 billion over six or seven years.

The Outstanding Issue of Taxpayer Funding

The suggestion of energy companies being reimbursed by the government has been often raised. Nevertheless, concrete details on such a mechanism have not yet been provided.

This lack of certainty is the primary factor behind the sector's caution. Operators seek guarantees against sovereign risk and the possibility that a future administration could renege on any agreement.

“They must be protected from sovereign risk, that we’ve seen in Venezuela before.”

Therefore, while political promises runs strong, the operational challenges suggest a road of extreme caution for potential significant venture in the Venezuelan energy industry.