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Energy analysts have voiced significant caution regarding recent predictions that US energy majors will quickly pump vast sums of dollars to fix the country's dilapidated production facilities.

Requirement of Absolute Assurances

Absent an solid promise of financial backing from the US federal government, experts believe international firms to proceed with extreme caution.

“It would be too early to speculate on any potential investments,” a spokesperson commented this weekend.

The aggressive timeframe of under 18 months was boldly outlined. Yet, realistic assessments paint a more cautious outlook.

A Probable Outlook

“It is likely going to take three years for any meaningful output increase,” commented one industry expert.

Experts believe energy firms would likely spend:

• The first year: Securing new operating agreements.
• The second year: Investing in rebuilding of facilities.
• Year three: Reaching a position to meaningfully increase production.

This suggests an increase of around half a million bpd possibly by late 2028.

Desire Versus Appetite for Risk

Experts make a important separation between firms' attention and their appetite to invest significantly.

“I believe their attention is an high score, on a scale of ten. However, their willingness is a much lower, because there is a lack of certainty yet.”

Veteran observers in the region reinforce this caution. They believe that majors will publicly talk up the opportunity while in practice acting with extreme caution.

The Vast Price Tag

The financial bill would be vast. Independent analysis suggest that increasing production by between half a million and a million bpd would require over $10 billion in investment over two to three years.

However, restoring production to previous levels of around 2.5 million barrels per day could require a staggering $80 billion to $90 billion over many more years.

The Outstanding Issue of Government Backing

The idea of energy companies being compensated by the US taxpayer has been often floated. However, concrete details on such a mechanism have not yet been announced.

The absence of certainty is the primary reason behind the industry's reluctance. Companies seek protection against political risk and the chance that a different administration could refuse any agreement.

“You need to be shielded from nationalization, that we’ve witnessed in Venezuela before.”

Ultimately, while political promises runs strong, the operational realities suggest a journey of slow deliberation for any significant venture in the country's oil sector.