In the early part of January, President Trump used the military forces to kidnap the President of Venezuela and put them on trial in New York. What was going to happen to the rest of the country? The President suggested the oil companies were going to add to the capital expenditure plans to overhaul the Venezuelan oil industry.

To understand if this is plausible a brief history is needed. There is a massive amount of oil in the country, it is a heavier crude and some of it is in tar sands. which needs to be extracted from the ground. The multinational oil firms have a long history in the country, but in the 1980’s the politics of the country nationalized the oil industry. Chevron remained at smaller capacity, but the majority of the country’s oil wealth is destined for the national treasury. Oil giants from Russia and China because they were from communist countries have an influence the oil industry. However, because the natural resource was nationalized (the countries sued but have never been paid for their assets), the US forced the country to sell less oil than previous and have never brought up the totals to where they were. Venezuelan oil has been sanctioned and much of the selling is on the black market.

After the President of Venezuela was removed, the President of the US said the US was going to run the Venezuela at least the oil industry. The President likes to send mixed messages, he said he was going to run it for the Venezuelan people, but in the US, he is deporting them to countries around the world. No one really knows what the President means when he says he will sell the oil and then release the funds to help the Venezuelan people.

In an article by Rebecca F Elliot of the New York Times News Service, the President invited the CEOs of 15 countries to the White House to talk about his plan to spend $100 billion in the Venezuelan oil fields. It should be noted, while the President was removed, he was replaced by the Vice President and the rest of the political process remains the same. These are the same people whom the US administration believes stole the election and represent a socialist government.

In the Houston area, because of Chevron’s continuing presence in the country, there are refineries that were built to handle the heavier crude of Venezuela.

At the table in the White House were big oil companies such as ExxonMobil, ConocoPhillips, Chevron, Continental Resources and others.

ExxonMobil’s CEO Darren Woods was particularly blunt, because before Exxon would go in there would have to the correct conditions: win-win-win. The company would win from the increase production which translates into shareholders winning; the government would win from a working relationship to the company and win for the people of the country – good neighbors. The company takes a long-term relationship meaning decades and decades.

For each country, Exxon is in, there needs to be a legal framework, durable investment protections and people working for the company in the country. At the moment, in Venezuela those conditions do no exist, but the government could change, but the process will take time.

Venezuela has great assets and finding the oil is not a problem, so ExxonMobil is willing to send in a high-level team to evaluate the situation, speak to the government and work towards working in the country. At the moment, from ExxonMobil’s perspective is the country is not investable. It is noted that ExxonMobil has made large discoveries in the offshore environment with a country beside Venezuela or Guayana.

President Trump was not happy with the answer.

Consulting energy firm Rystad Energy did projections and believed raising the production from to several hundred thousand barrels a day within the next 2 years is doable with a modest cost. But raising the output above 1.4 million barrels a day would require $140 billion between now and 2040.

Chevron expects to increase production in Venezuela by 50% over the next 2 years.

It should be noted while Venezuelan has the world’s largest oil reserves, its production is less than 5% and needs major infrastructure investments to boost output, along with no sanctions from the US.

Linking to dividend paying stocks, President Trump is acting like a stock promoter for the oil industry and while everyone sees potential there is also reality. For dividend paying companies, they need to focus on the long-term consistent profits, not the short-term gain. If you own a company which begins to sound like junior companies it is time to find other companies to invest in.

There are more questions than answers, till the next time – to raising questions.