US oil companies wave goodbye Why Trump's big plan with Venezuela's oil is not working out

Venezuela is the country with the world's largest oil reserves. Donald Trump wants US companies to get the black gold out of the ground - but they have good reasons to hold back on investing billions.

"Because of Trump! Huge oil worries in Russia", headlines "Bild" after US troops in Caracas captured President Nicolás Maduro. There is panic in the Kremlin, it continues: "US companies could come to Venezuela and increase oil production in the country - this would lead to falling oil prices."

If the US brings more oil onto the market and prices fall, Moscow's revenues will also plummet - and Vladimir Putin's budget is reliant on these funds, writes the German newspaper.

It is true that Russia is dependent on oil revenues: 30 to 50 percent of the national budget is covered by oil, according to the Oxford Institute for Energy Studies. But the black gold in Venezuela will not flow that quickly - and it remains to be seen whether production will pay off.

Oil company boss: "Not suitable for investment"

The clearest indication that Venezuela's natural resources are not as profitable as Washington hopes is the reaction of the major US oil companies that are supposed to extract the raw material. On January 9, the bosses visit the White House, where the President calls for investments of 100 billion dollars.

According to Bloomberg, the CEO of ExxonMobil expresses the "strongest reservations": "If we look at the legal and economic constructions and framework conditions, it's not suitable for investment," Darren Woods is quoted as saying, emphasizing that his company has already been expropriated twice in the country.

"How durable is the protection from a financial perspective? What will the returns be?" asks the 60-year-old. "What are the economic measures and the legal framework?" All these things need to be clarified in order to predict how business will develop in the coming decades.

Donald Trump: "I didn't like the answer"

Although not only ExxonMobil, but also giants such as Chevron and ConocoPhillips are reluctant to make concrete commitments to the White House, Donald Trump particularly resents Darren Woods' behavior.

"I didn't like Exxon's answer," the 79-year-old said angrily on board Air Force One on January 11. "I would probably tend to leave Exxon out of it. I didn't like their answer. They're being too cute."

The oil barons' reticence is understandable. There are several reasons that speak against a business adventure in Venezuela: Firstly, there is the enormous investment required to bring the battered infrastructure back up to scratch.

The Norwegian company Rystad Energy estimates that 8 to 9 billion dollars a year would have to be invested in order to increase Venezuela's oil production tenfold by 2040, according to the BBC. Francisco Monaldi from Rice University estimates 10 billion dollars a year, adds Bloomberg.

In addition to these high entry costs, there is also the question of the security of this investment. On the one hand, there is a risk that the business in Venezuela could be nationalized again, as ExxonMobil and ConocoPhillips know from their own experience. Secondly, the employees of the oil companies must be protected from criminals.

But even if the infrastructure is refloated and property rights and physical integrity are guaranteed, it is still far from certain that production in the South American country will be profitable.

Venezuela's oil is "very dense, very dirty, very hard"

Another problem is that Venezuelan crude oil is very sticky. It has a high sulphur content, which makes it more difficult to extract and refine, explains Diego Rivera Rivota from Columbia University to the AP news agency: "It's very dense, very dirty, very hard. And it's also very acidic."

This increases costs - for extraction, transportation and refining. If the oil price remains low, it may hardly be worth getting the oil out of the ground. Added to this are the higher emissions caused by the process, AP continues. At least the US has the refineries to process such oil, writes the Guardian.

"It will be difficult to see major commitments until the political situation has fully stabilized, and when that will be the case is uncertain," says Claudio Galimberti of Rystad Energy to the BBC. Oil giant ConocoPhillips from Houston, Texas, has a similar view.

USA attacks VenezuelaState oil company PDVSA negotiates oil sale with USA

"ConocoPhillips is monitoring developments in Venezuela and their potential impact on global energy supply and stability," a spokesperson told Reuters. "It would be premature to speculate on future business activities or investments."

It can be assumed that the US president "does not like" these answers either.