Amna Nawaz:
Today, just hours after the U.S. military boarded another Venezuelan oil tanker in the Caribbean sea, President Trump hosted a group of top oil executives at the White House and outlined his plan for American companies to exploit Venezuelan resources.
President Donald Trump:
The plan is for them to spend at least $100 billion to rebuild the capacity and the infrastructure necessary. Venezuela has also agreed that the United States will immediately begin refining and selling up to 50 million barrels of Venezuelan crude oil, which will continue indefinitely.
Amna Nawaz:
The president said the U.S. government would provide total safety and security and that he expected the companies would in return move quickly to revitalize Venezuela’s oil infrastructure.
Currently, Venezuela sits on more oil than any nation on the planet, but produces just 1 percent of global supply.
To help understand what comes next, we’re joined now by Bob McNally, founder and president of Rapidan Energy Group and a former energy adviser to President George W. Bush.
Welcome to the show. Thanks so much for joining us.
Bob McNally, Founder and President, Rapidan Energy Group: Thank you, Amna. Great to be here.
Amna Nawaz:
So you saw a table there filled with oil executives surrounding the president, who seemed to be cautiously optimistic about their future investments in Venezuela.
From what you’re hearing, how keen are big oil companies to plant a flag in Venezuela, as the president wants to see happen?
Bob McNally:
Well, you use the word cautious, and I think that’s what oil company executives have been trying to get across to the administration in private conversations, and then today, even on camera.
Particularly Darren Woods from Exxon did a really good job of that. But I think there’s been progress in closing this expectations gap between the White House, the president, who wants capital to flow and oil production to grow fast now, and oil executives, who say it’s going to be a long and winding road.
So I think, though, they’re hearing each other, they’re taking on board what each other is saying, and I think the expectations gap is closing steadily.
Amna Nawaz:
That security guarantee that the president seemed to promise there for oil executives, is that something you think they need to be able to make investments and go into work in Venezuela? And is that a guarantee that the U.S. can make good on?
Bob McNally:
They absolutely need security. I have never seen companies more obsessed with security than oil companies, really.
And they will not even send technical teams to look around unless they know they can keep their people safe. I don’t think the federal government can provide that. The president, I think I heard him say there might be contractors. The oil companies themselves are used to taking care of their own security. They operate in very difficult places, more difficult places than Venezuela.
So I don’t think they’re going to expect or rely the U.S. government to provide security. They will do it themselves with their contractors, local partners, and their own security staff.
Amna Nawaz:
Just to pull back a bit from the details of the logistics here and plans ahead, for context, we now have the president saying he expects us involvement in Venezuela to extend for many years. You saw the energy secretary, Chris Wright, saying the U.S. will control Venezuelan oil sales indefinitely.
Is all of this legal? Is there any precedent for what we’re seeing here?
Bob McNally:
I’m not aware of a precedent for what we’re seeing here.
Legal — the president asserting that it is. If Venezuela, if the government, the post-Maduro, but still Chavismo government is OK with working with the president, I suppose it’s legal over there. They can pretty much do what they want.
But I think we’re thinking about three buckets of oil here. There’s what to do with the 30 million barrels or so that’s been produced and is stored. And it seems the Venezuelan government and the United States legally, as far as they both are concerned, are going to sell that to the market. So that’s already been produced.
But then there’s the next couple of years during the Trump administration. Can they get production back up? If the Venezuelan government is on board with changing its laws and regulations and the commercial terms, you will see more investment go in there. It’ll be legal and you will see production go up by a little bit.
But then, finally, there’s the big oil. And that’s years down the road, well after the Trump administration and only after tens of billions of dollars have been spent. The Trump administration has very little control over that.
Amna Nawaz:
What about the potential impact here? If production is able to be ramped up, we know the president has repeatedly talked about wanting to get — bring oil prices down to $50 a barrel. They’re already, I think, at $59 a barrel, a four-year low.
Would ramping up production in Venezuela eventually bring down the cost? Could it mean lower prices for American and global consumers?
Bob McNally:
You know, the Venezuelan oil will only really come on in large size and have a big price impact after 2030.
But barring a problem with Iran, as your recent segment discussed, barring a geopolitical risk, the president’s lucky. Oil prices have been trending down. And it’s possible that you will have at the same time later this year lower oil prices still, lower gasoline prices, and Venezuela increasing its production a little bit, sending more oil to the United States.
The Venezuelan oil won’t cause the oil price to go down, but the coincidence of it will give the president some bragging rights, and I’m sure he will take advantage of it.
Amna Nawaz:
Bob McNally of the Rapidan Energy Group joining us tonight.
Bob, thank you so much for your time. Good to speak with you.
Bob McNally:
Thank you.
