In the commodity markets, there are always places where the mineral is located, largely in commercial amounts but is late to be developed. Similar to most things in life, there are the easy deposits and the harder deposits, while everyone dreams about the easy deposits, for most of the deposits infrastructure needs to be developed before it can be used. An example of this is the oil industry. Most of the world’s oil deposits are known, but the easy drilling has long gone. The least expensive place to drill is the Middle East because the oil is near the surface and needs little refining before it comes out as gasoline, kerosene, airplane fuel and a host of other uses. The most expensive place to drill is heavy oil because the oil is mixed with dirt or sand. The oil has to be transported and refined a great deal before the oil can be used. If you think about Canada’s Oil Sands and the billions of dollars that has transformed the sands to oil, then you have an idea of what is needed in Venezuela.

In an article by Michelle Chapman of the Associated Press, Chevron which has been operating in Venezuela for years is expecting to double its oil production in 5 years at a cost of $7 billion to 600,000 barrels a day.

Recently President Trump announced a deal in Venezuela, to develop the nation’s oil reserves and give the Pentagon a stake in the business.

The Orinoco Belt in Venezuela holds more than 303 billion barrels of oil according to OPEC 20225 Annual Statistical Bulletin, Saudi Arabia has 267 billion barrels of oil. Saudi produces between 10 and 11 million barrels a day, Venezuela produces 1 million and the US produces 14 million barrels of oil thanks to fracking or technology.

Back in a Congress hearing in January, ExxonMobil CEO Darren Woods said, for the company Venezuela was univestable, and at the present time, an Exxon spokesperson said nothing has changed.

In 1976, Venezuela nationalized its oil industry. In 2007, Veneuela pushed companies into joint ventures and seized assets if the companies refused the national oil as a partner. Chevron said yes to a joint venture, companies such as Exxon and Conoco-Phillips said no and their assets were nationalized.

While President Trump believes the announcement of the oil industry with Venezuela will have oil flowing into the strategic reserve in months, the industry believes without billions of dollars in investment in infrastructure, it will take 2 to 4 years before greater than 1 million barrels will flow from Venezuela.

Linking to dividend paying stocks, when government makes policies, it often affects the largest companies and not everyone will be in 100% agreement it is the best policies. Some will because they can continue doing along the road or strategic plan they have mapped out, others are looking for something more. The companies that are looking for something more tend to have stricter guidelines, but with government polices adaptability is the key. Sometimes the stricter guidelines gives the investor better reasons to invest in that company for the long term. There are always some choices in the investment world, which is better for you?

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