President Trump is trying to convince oil companies to invest billions of dollars in Venezuela’s oil industry, to boost production from that country.
If he succeeds, industry analyst Brad Keithley foresees two ways it might impact Alaska’s oil production. One is competition for capital.
“If Venezuela starts attracting additional investment dollars, you can see a scenario where Alaska might get fewer investment dollars than it otherwise would have, in the absence of the opportunities in Venezuela,” he said.
He emphasized that any impact would be years in the future. It’s not going to affect ongoing Alaska developments like Willow, ConocoPhillips’ big Arctic project, or Pikka, where Santos and Repsol are expected to begin production early this year. But if Venezuela has a stable government and the fiscal conditions align, Keithley said he expects Conoco would consider returning to that country, leaving less for it to spend in Alaska.
“There’s only so many investment dollars available for oil in the world,” he said.
ConocoPhillips has told news outlets that it’s premature to speculate on where it might invest but that it’s monitoring developments in Venezuela.
Another impact of concern to Alaska is on oil prices. Venezuela is said to have the largest known oil reserves in the world. If Venezuelan oil floods the market, prices would plummet. But Keithley said it’s not as simple as that.
“Even if Venezuela goes back to 2.5 million barrels a day in 10 or 15 years,” he said, “you can't absolutely say, ‘Well, that's going to degrade price,’ because you don't know what OPEC’s response to that's going to be.”
The Organization of the Petroleum Exporting Countries strives to maintain prices. Keithley said OPEC could offset the addition of Venezuelan oil by cutting production from other parts of the world.
