Watching Donald Trump’s press conference at Mar-a-Lago on Saturday, in which he said that the U.S. would “run” Venezuela and seize some of the country’s oil wealth “in the form of reimbursement for the damages caused us by that country,” my mind went back to 2003. In the immediate aftermath of the U.S. invasion of Iraq, I spent several weeks travelling around the country’s oil fields, some of which were still littered with live ordnance, speaking with members of the U.S.-led Task Force Rio—the “Rio” stood for “Restore Iraqi Oil”—and local workers. I also went to Baghdad, where I interviewed officials from the Iraqi oil ministry.
Venezuela isn’t Iraq, of course, and so far, at least, there hasn’t been a U.S. occupation. (Although Trump remarked, “We’re not afraid of boots on the ground.”) Nonetheless, this is the second time in twenty-three years that the United States has deposed the authoritarian leader of an oil-rich nation—the third if you count the NATO strikes on Libya in 2011, which hastened the fall of Muammar Gaddafi. History has some lessons to offer.
Unlike Trump, who is an unashamed petro-imperialist, members of the Bush Administration insisted that their push for regime change in Iraq was unconnected to hydrocarbons—Donald Rumsfeld famously said it had “literally nothing to do with oil”—and that the postwar reconstruction of Iraq’s oil industry was designed purely to help the country. At an oil refinery in Basra, I sat in on a meeting chaired by the American brigadier general who headed up Task Force Rio. An aide to the general gave me a handout, which said, “Who will be running the Iraqi oil industry? Iraqis are responsible for the energy sector.”
Many queried U.S. intentions. Iraq then had the second-largest proven oil reserves of any country in the Middle East, and Bush, shortly after taking office in 2001, had declared an energy crisis. At the time, the United States was importing about half the oil it burned. An energy task force led by Vice-President Dick Cheney, who had previously been the chief executive of the oil-services company Halliburton, issued a report that recommended more investments in renewables, energy-saving technology, and fossil fuels. It also called for more imports from Latin America, including Venezuela, which was already the third-largest foreign supplier to the U.S., after Canada and Saudi Arabia. While barely mentioning Iraq, the report said, “Energy security must be a priority of US trade and foreign policy.”
Today, as a result of the shale-oil revolution—fracking—the United States is the world’s largest oil producer, even larger than Saudi Arabia, and a net exporter of petroleum. But the A.I. buildout is rapidly increasing the demand for power, and the Trump Administration, despite its aversion to renewables, is set on achieving what it termed, in its recently published national-security strategy, “Energy Dominance.” In this context, it’s hardly surprising that Venezuela, which now enjoys the status of the country with the largest proven oil reserves—more than three hundred billion barrels—has attracted Trump’s attention. Most of the Venezuelan oil is situated in the Orinoco Belt, which runs east to west in the north of the country. Many of the crude deposits are in the form of a heavy sludge, which is difficult to extract and refine. But, with expertise and capital, it can be done. Moreover, many U.S. refineries, particularly in the Gulf and on the West Coast, are configured for heavy crude.
Despite this domestic refining capacity, ramping up production in Venezuela will be a mighty task. Like its Iraqi counterpart under Saddam Hussein, the Venezuelan oil industry has suffered from many years of sanctions and chronic underinvestment. Many of its skilled employees have emigrated. Last year, the industry produced about a million barrels a day, roughly a third of its output a quarter of a century ago. On Saturday, Trump said that big U.S. oil companies would “go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country.” It’s not that simple.
One challenge is the scale of investment required: one energy analyst told the Financial Times it would take more than a hundred billion dollars to double Venezuela’s oil output. Another issue is the price of crude, which recently dipped below sixty dollars, reaching a four-year low. At the moment, Chevron is the only major U.S. oil company operating in Venezuela. Shortly before Christmas, it emerged that the Administration had approached other U.S. firms, such as ExxonMobil and ConocoPhillips, to see if they are interested in returning to a country where they operated before the government of Hugo Chávez, Nicolás Maduro’s predecessor, seized their assets. (Lawsuits sparked by that seizure are still ongoing.) Politico reported that some responses to the Administration’s feelers were negative. “Frankly, there’s not a lot of interest from the industry, in light of lower oil prices and more attractive fields globally,” one source told the news site.
