U.S.-Venezuela Oil Deal Faces Uncertainty

U.S.-Venezuela oil agreement has left many questioning its viability. Waco economist Ray Perryman and Odessa oilman Kirk Edwards pointed out that Venezuelan oil production is in a dilapidated state, with infrastructure not reflective of recent advances in exploration and extraction processes.

Perryman noted that several major oil companies have sizable investments in the area, while others are focusing elsewhere. He emphasized that corporate decisions depend on perceptions of potential profits, risks, and other available options.

Edwards highlighted the physical condition of Venezuela's oil industry, stating that much of its crude is extremely heavy and requires significant processing before it can be moved efficiently into world markets. He also mentioned the country's need for enormous investments in pipelines, storage, power systems, refineries, terminals, and ports.

Rebuilding the industry will likely require tens of billions of dollars and many years. Edwards questioned why American majors would take on this risk when they can invest in established projects with predictable fiscal terms and less sovereign risk.