LEILA FADEL, HOST:
President Trump keeps saying he wants the United States to, quote, "take back oil" Venezuela stole from the U.S. He means Venezuelan oil, of which the country has a significant amount. And President Trump has made clear that he wants American companies to profit off that oil. Right now, only one major American oil company operates in Venezuela, and that's Chevron. To discuss, Jason Bordoff joins me now. He's founding director of the Center on Global Energy Policy at Columbia University. Good morning and welcome to the program.
JASON BORDOFF: Good morning. Thanks for having me on.
FADEL: So this claim that we keep hearing from the president that Venezuela stole U.S. oil, what does he mean? I mean, this is oil that's in Venezuela.
BORDOFF: It's in Venezuela. They nationalized the industry many decades ago. And then many companies, including U.S. companies like ConocoPhillips, ExxonMobil, had rights to develop that oil. But when Hugo Chavez came to power, the Venezuelan government expropriated those assets. There have been arbitration settlement claims in international tribunals made against Venezuela. Those are debts that can be repaid and reclaimed. Doesn't mean the U.S. continues to have an ongoing right to that oil, but there are companies that have claims that they have won arbitration settlements over expropriated assets in the past.
FADEL: Now, we hear the president say, now we're going to take back the oil. What are you thinking about what that means and how it will impact global oil markets?
BORDOFF: I think, in the best-case scenario for Venezuela, what it would mean is that we see a stable transition to a democratically elected government that puts in place a predictable oil investment and governance framework with rule of law - that encourages international investment from companies like Chevron, the sole remaining operator in the United States, to go in and invest and develop that resource. That would accrue to the benefit of those international oil companies. It would supply more oil to the market.
But most importantly, it would provide revenue to the new government of Venezuela that will sorely need it to rebuild what has been a quite destroyed country. There are other ways one could take that rhetoric if you were to take Trump literally, which sort of hearkens back to an early 20th century view of oil geopolitics in which great powers pursued resources through concessions or quasi-imperial control. That's not really how the global oil market works anymore, so that's probably not where we are headed.
FADEL: I mean, is it as simple, though, as it's being described? The president's saying U.S. oil companies will just go into Venezuela, rebuild the infrastructure and start producing.
BORDOFF: It's not simple at all. Venezuela was once a major oil producer, about 3.5 million barrels a day. The Venezuelan oil sector and the state-owned company, PDVSA, was one of the best in the world under Chavez. And then Maduro, that set in motion a long decline amid mismanagement, corruption and international sanctions. So the industry has been really quite deteriorated. And it would take billions and billions of dollars of investment to rebuild that. It would take several years in a sort of best-case scenario. And again, that only happens if private firms have confidence in the new government, in rule of law, in the sanctity of contracts there to go and put that kind of capital to work.
FADEL: I mean, does that exist, a willingness to invest in Venezuela given all of the unknowns and the possible instability right now?
BORDOFF: You know, it's only been a few days, so it's hard to tell. The resource is there. There's a lot of oil in Venezuela. And we should remember, you know, oil demand is still growing. U.S. shale production is flatlining. So companies are already looking for the next sources of investment around the world, in complicated places geopolitically like Libya or Iraq. So Venezuela might be on that list. But we're going to have to see in the coming weeks and months and years whether there is, in fact, a stable transition to a democratically elected government.
FADEL: Maduro being removed from power, how will that affect global oil markets?
BORDOFF: It hasn't had too much of an effect right now. If anything, it has maybe eased a little bit of concern people had that the U.S. military activity in the region might actually become a hot conflict that would affect oil infrastructure. We should remember that the U.S. has a blockade on vessels, oil tankers leaving Venezuela and going into Venezuela. So, if anything, right now, that's undermining Venezuela's production capability somewhat. But right now, there's not too much of an impact on oil markets because we haven't seen too much of a change in the on-the-ground situation there.
FADEL: Jason Bordoff is founding director of the Center on Global Energy Policy at Columbia University. Thank you so much.
BORDOFF: Thank you for having me. Transcript provided by NPR, Copyright NPR.
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