As I’ve posted before, the reserve numbers for Venezuela are the stuff of fantasy. They were unaudited, self-promotional estimates produced when oil briefly exploded to $150 WTI in 2008.
Syria is chump change and has no bearing. Iraq has political risk but easily accessible high-quality oil. Exxon has made no investment thus far: there’s a non-binding preliminary agreement.
Whether 100 mm bbls. or 300, Venezuela sour is costly to extract and to process. The mechanisms for doing so are kaput and will cost many billions to replace.
If you were running a major integrated energy company, why would you invest billions in a project with a very long payoff period and an uncertain political backdrop?
Meanwhile, if you ARE successful, is it really in your shareholders’ interest to produce more volumes to drive down prices? President Trump and Interior Secretary Burgum have both within the past 24 hours expressed the desire to drive WTI down to $50.
At that price it’d be nuts to boost capex in exploration and production: the better use would be share buybacks (which happen to have zero risk.)
When I was 12, I got two shares of stock from my grandfather: one of American Tobacco and one of Standard Oil of New Jersey, predecessor of ExxonMobil. That was almost 60 years ago. The former became American Brands, then Fortune Brands, and then got bought by Suntory. My share of Standard Oil of New Jersey has had a compound rate of return of over 8.5% over half a century. That was not accomplished by throwing money at projects to please our government or any other. Political expediency would be only reason to invest in Venezuela today.
If Darren Woods wanted to BS President Trump, he could’ve said, “We’re analyzing it and giving it serious consideration.” But he’s a stand-up guy.
Syria was a player before the war. A major civil war and each side trying to deny the other access to that revenue by destroying pipelines, platforms, and blowing up storage facilities takes its toll.
Venezuela: let’s assume you’re right and they over inflated their numbers, then they would still be number #2: https://2b1stconsulting.com/proven-reserves/ (2012 data)
With us taking over Iraq, Syria, Libya, and Venezuela, you have seen our control over the global “traded” oil increase from about 2/3rds (1991) to 4/5ths (current).
https://ourworldindata.org/grapher/oil-production-by-country
If this were a monopoly game. We won.
1.) We have the political reigns in our hands or a high degree of influence in Saudi Arabia, Kuwait, UAE, Qatar, Iraq, Venezuela, Syria, Libya, Nigeria, Canada, Egypt and Mexico. We are of course ourselves a huge energy producer.
2.) Most of the oil and gas is traded in the USD and we can play games with that too.
3.) The systems managing the trading (the payment networks for example), belong to us.
4.) We have declared ourselves the world’s policeman a long time ago, we make the rules and selectively apply them. So for example, our naval blockade of Venezuela and seizing their tankers is acceptable, but Iran doing that to a neighbor, or Libya doing that to their Gulf, or China closing the South China Sea would escalate to our military involvement and we would talk about rule of law, international conventions, bla bla bla. We own the water ways (Panama and Suez) and keep them open to “us” but can deny their use to those we don’t like. It’s good to be the king.
You can do things like this when you’re the king: https://m.economictimes.com/news/international/world-news/us-blew-up-nord-stream-pipeline-in-covert-operation-says-top-investigative-journalist/articleshow/97812841.cms
And no one will look to hard either. LOL
Most the world runs on energy we control.