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Market specialists have expressed considerable caution regarding optimistic predictions that US energy majors will swiftly commit vast sums of dollars to rebuild the country's broken oil infrastructure.

Demand for Absolute Guarantees

Without an “iron-clad guarantee” of complete repayment from the Washington, specialists predict international firms to move with extreme caution.

“It would be too early to discuss any future business activities,” a spokesperson stated this weekend.

The ambitious schedule of under 18 months was publicly suggested. However, expert analyses paint a more cautious outlook.

A More Realistic Outlook

“It is likely going to take 36 months for any kind of production bounce,” said one industry expert.

Experts believe operators would likely spend:

• Year one: Securing new regulatory frameworks.
• Year two: Commencing overhaul of facilities.
• The third year: Being able to significantly ramp up output.

The result could be an increase of around 500,000 bpd possibly by 2029.

Appetite Compared to Readiness for Spending

Experts make a critical difference between firms' attention and their appetite to invest heavily.

“I think their attention is an eight, on a range of ten. However, their willingness is a four or five, because there is significant uncertainty yet.”

Veteran diplomats in the region reinforce this caution. The expectation is that majors will politically express enthusiasm while actually acting with deliberate slowness.

The Vast Price Tag

The monetary outlay would be vast. University projections suggest that increasing production by between 500,000 and a million bpd would require more than $10 billion in investment over several years.

But, restoring production to peak levels of around 2.5 million bpd could require a massive $80 billion to $90 billion over many more years.

The Outstanding Issue of Taxpayer Funding

The prospect of energy companies being paid back by the federal government has been often mentioned. However, formal assurances on this proposal have so far not been forthcoming.

The absence of a solid plan is the key reason behind the industry's caution. Operators seek guarantees against sovereign risk and the risk that a subsequent government could cancel any deal.

“They must be shielded from nationalization, that we’ve seen in Venezuela already.”

Ultimately, while political promises runs high, the financial realities suggest a path of measured steps for any major venture in the country's energy industry.