Original Author: Alexander

Original Translation: Deep Tide TechFlow

Let me quickly analyze the significant events currently happening in Venezuela. Since oil is one of my areas of expertise, I will try to express my views as concisely and clearly as possible, and make it freely available for reading. If you like my analysis, please help share it.

The dictator Nicolás Maduro, a leader who transformed from a bus driver to a dictator, has caused the deaths of tens of thousands, the exile of 8 million, and oppression of 34 million. The root of all this mainly stems from the curse of oil wealth, corruption, and a "breeding ground for collectivism." Yes, the resource curse truly exists.

Today, the U.S. government announced the successful capture of Maduro during a special military operation. Reports indicate that Maduro and his wife have been transported from Caracas to the U.S. and are currently detained at an undisclosed location, with plans to prosecute him in New York on charges of "drug terrorism" and "drug trafficking."

So, what will happen next? We do not yet know. But if Trump decides to reclaim the U.S. oil assets expropriated by the Venezuelan government, or even temporarily take over the country to rebuild its institutions, I fully support it. If you are willing to think deeply, you should support it too.

Why do I say this? Because for decades, the elite class in Venezuela has proven that they cannot escape the predicament of the "resource curse." Such policies would not only benefit humanity and freedom but also be a blessing for peace. Why do I think so?

The reason is that Venezuela is not just an ordinary OPEC (Organization of the Petroleum Exporting Countries) member, as can be seen from the OPEC production table below. (Note: The actions of Trump and the U.S. government mentioned here are hypothetical discussions and not facts; readers should be aware of this distinction.)

Figure: OPEC Oil Production (excluding natural gas condensate)

Source: Burggraben Analysis; Multiple Data

In fact, Venezuela has the largest oil reserves in the world, and the quality of its conventional oil is comparable to that of Saudi Arabia. In other words, it has the potential to significantly influence global oil prices just like Saudi Arabia. Generally speaking, lower oil prices (which is exactly what Trump hopes for) are often seen as a harbinger of peace and prosperity.

Before delving into geological conditions and oil production, let’s return to basic principles. In my personal opinion (I am Swiss, not a U.S. voter), Trump’s view that "U.S. oil assets should be returned to their legitimate American owners" is correct. This is clearly his position. Therefore, yes, this intervention is not just about the drug issue; it is closely related to oil, and I fully support this stance.

As a resource investor, I am truly tired of seeing dictators and regimes around the world plundering Western assets without providing reasonable compensation, while Western leaders either turn a blind eye or hide behind procedures and polite statements.

We should not reward corrupt leaders, whether now or in the future. We should firmly uphold the rule of law when Western corporate interests are harmed. Even if you do not agree with my views (which is completely fine), as a resource investor, you should take comfort in the fact that Trump may have reduced the ground risks for all commodities in emerging markets to some extent, at least in the short term.

In any case, Venezuela has the largest oil reserves in the world, a significant portion of which originally belonged to the Western companies that discovered and developed these reserves. These companies not only developed part of the resources but also paid the taxes owed to the host country.

The Orinoco Belt alone represents the largest oil accumulation on Earth, with an average estimated recoverable heavy oil volume of about 513 billion barrels. In terms of reserves, the economically proven recoverable portion accounts for about 20% of the world's known reserves.

However, in a market with a total daily oil demand of about 85 million barrels (note that this does not include the total daily liquid fuel output of about 103 million barrels), Venezuela's oil production accounts for only 1%.

Ladies and gentlemen, this is the consequence of socialism and corruption.

Under Maduro's rule, for years, people have even died in the streets from hunger. The next time someone tries to sell us the "warmth of collectivism," please remember this.

It is important to note that there are motives to exaggerate OPEC's oil reserve data, as this data determines its production quotas. This is why every seasoned geologist will tell you that, for example, Kuwait's heavy oil reserve data is overstated.

However, a careful study of the U.S. Geological Survey (USGS) reports reveals that the possibility of overestimating Venezuela's heavy oil resources is low.

Even if the medium viscosity of the Orinoco Belt may halve the ultimately recoverable amount, other resources are likely to be discovered elsewhere, including offshore areas of Venezuela (such as nearby Guyana).

Therefore, from any perspective, this is a huge "cake," and in the long run, it has the potential for considerable production growth.

Figure: Global Oil Reserves

If the U.S. oil industry and the global oil services industry are allowed to develop this "treasure," Venezuela will surpass Saudi Arabia's production within the next decade.

Remember my words; I am telling you this now.

The conventionality and richness of these oil fields are so high that once the advanced technologies of today's oil industry are fully applied to these reserves, their potential will be immeasurable.

American entrepreneurship has squeezed out 9.8 million barrels of oil per day from hard shale.

And Venezuela's oil resources are like a Texas-sized swimming pool filled with oil, just waiting to be extracted, piped, and utilized. This is the last virgin land of oil wealth.

Figure: Geological Map of Venezuela's Oil Resources

The increase in oil production will bring blessings to all aspects of Venezuela: huge tax revenues, high-paying jobs, and explosive growth in related service industries—from oil services to construction, from leisure and entertainment to hospitality, a complete ecosystem will be formed.

Imagine the prosperous scene of Texas, but on a larger scale.

Leftists may describe it as "colonialism." But as Texas and Norway have shown, this is called capitalism.

Capitalism works well in an environment with sound institutions, while it struggles to operate in emerging markets lacking effective institutions.

This is a fact, and you can quote me anytime, anywhere.

Figure: Changes in Venezuela's Oil Production Since 1965 (Units: Thousand Barrels/Day)

Source: Bloomberg

Under appropriate conditions, Venezuela's oil production can be rapidly increased; even a "small increase" will have a huge impact in a commodity market determined by marginal prices.

Currently, Venezuela's oil production is about 900,000 barrels per day. If property rights and rules can be restored, then increasing production to 1.5 million barrels per day within 18 months is a realistic initial goal. This growth will be led by international oil giants with the richest experience, strongest financial strength, and the largest outstanding claims, including Chevron, ConocoPhillips, Exxon, and possibly Shell and Italy's Eni.

These companies have suffered losses in the past and still have a large amount of outstanding payments to recover. Reports indicate that ConocoPhillips alone has over $10 billion in unpaid amounts. However, it should be clear that, except for Chevron, these oil giants are unlikely to actively participate until political stability is achieved, the actual managers of the state are clarified, and a solid and unchangeable legal framework is established.

If the bottlenecks in infrastructure such as pipelines, electricity, upgrades, and ports can be resolved, restoring production to 3.5 million barrels per day is achievable. But it should be noted that large numbers can sometimes be misleading. Assuming it takes $60 billion to restore pipelines, electricity, and export infrastructure to normal, this may sound like a huge amount, but keep in mind that in 2010 alone, the total investment in drilling by the U.S. shale oil industry exceeded this figure.

Capital exists, capabilities exist, and the key to speed lies in the legal framework.

Without a stable legal environment, there will be little change.

If the rules after Trump are revised, or if Venezuela merely transitions from one corrupt chaotic situation to another, then production will likely only maintain between 1.5 million to 3 million barrels per day. This is the worst-case scenario. However, if the rule of law can truly be implemented, then reaching a production of 10 million barrels per day within the next decade is not a pipe dream. This is simply the natural result of world-class resources being developed by a world-class industry.

The key point is: even if we do not need to reach the best expectations, simply making Venezuela a stable producer of 5 million barrels per day (similar to today's Canada) and maintaining this level for decades to come would at least offset the production losses from the future maturity decline of U.S. shale oil fields. In a market where marginal barrels determine prices, this would have a huge impact.

In fact, you do not even need to wait for Venezuela's oil production to reach 5 million barrels per day. Just increasing from the current 900,000 barrels per day to 1.5 million barrels per day next year, this trend alone would be enough to impact Brent crude prices, as the market is already in a state of "oversupply" for 2026 and 2027.

Yes, the pricing of physical commodities is based on current demand, not future expectations. But in the oil market, the number of "virtual barrels" in paper trading far exceeds the physical quantities in the actual market, and market expectations often drive price fluctuations before physical oil arrives.

Recall the fourth quarter of 2018, when Trump alone, with changes in tone and exemptions from sanctions on Iran, pulled Brent oil prices down from $90 per barrel to $55, with almost no substantial changes in supply.

In any case, long-term low oil prices are a blessing for all humanity.

I would like to further explain my point and preemptively respond to potential critics who may question my predictions. After all, consulting firms like Energy Aspects always try to make things sound more complicated.

First, let me say, without modesty, that I have directly or indirectly invested in the oil industry for twenty years. I have been to more remote oil fields than many industry "keyboard experts." I have experienced success and failure with my own money, not someone else's.

I have spent hundreds of hours analyzing this market from scratch, from single wells to countries, and then to every barrel of oil on a global scale. I have used almost all serious data tools, from Kpler to OilX, Kayrros, JODI, and services from major institutions. For a time, I really felt that I could almost track the flow of every barrel of oil in real-time. So trust me, when I simplify the analysis process here, I have a basis for it.

Secondly, of course, I cannot accurately predict future production; after all, this is not a physics problem. It is path-dependent, meaning it entirely depends on what happens next. If Trump does not implement his plans, if property rights issues are not resolved, and if Venezuela merely transitions from one corrupt chaotic situation to another after Maduro steps down, then nothing will change, or only marginal changes will occur.

But if Trump can get half of it right, believe me, Venezuela's prospects will exceed expectations. These oil wells will become "behemoths," and the industry will be able to develop these resources at a record pace, provided that political interference is kept at bay.

However, these key conditions must be established first. The starting point for driving oil production growth lies in property rights protection, the rule of law, and a free market economy. Without these foundations, even with abundant oil reserves, significant growth will be difficult to achieve. Perhaps by the end of 2027, production could reach 1.5 million barrels per day? Who knows.

The third point, which most people overlook, is that Venezuela is not starting from scratch. It is referred to in the industry as "brownfield," meaning its oil fields already have a certain level of development foundation. Currently, Chevron is producing about 300,000 barrels of oil per day in Venezuela. They received permission during the Biden administration, and Chevron's history in Venezuela dates back nearly 100 years.

This means that Chevron has decades of geological data, production history, and operational experience. ConocoPhillips and Exxon left in 2007 when then-President Hugo Chávez forcibly renegotiated contracts with all oil giants, including European companies.

Thus, these oil giants already know the locations of oil fields, what technologies are effective, which equipment is prone to failure, and how to scale up production. The data they possess may be more detailed than that of Petróleos de Venezuela (PDVSA). This provides a significant first-mover advantage for any revival plan.

For this reason, Venezuela's situation will not resemble that of the post-Soviet Union. At that time, Western companies were blocked from entering for political reasons and had to learn everything from scratch. The oil industry is not just about pipelines and pumps; it involves logistics, engineering, process management, and vast amounts of data. Once this knowledge is mastered and the rules of the game are clarified, capital and capability will naturally follow.

Of course, there are still many uncertainties. But even a moderate outcome, such as production of 4 to 5 million barrels per day, would structurally change the supply-demand balance of global liquid energy. Believe me, this would be a brutal shock, as Venezuela would produce one of the cheapest oils in the world. This change would have far-reaching implications. We can only hope that all of this can be realized.

For those who are skeptical about a significant increase in Venezuela's oil production, I would like to offer another perspective. The U.S. once accomplished a seemingly equally absurd feat. U.S. shale oil production grew from 1.8 million barrels per day in 2010 to 9.8 million barrels per day by the end of 2025. In other words, American entrepreneurship has literally extracted an oil production equivalent to a "Saudi Arabia" scale from rock. Adding in production from Alaska and the Gulf of Mexico, the current total U.S. oil production is about 13.8 million barrels per day, surpassing a level that most people thought possible 15 years ago.

Figure: U.S. Shale Oil Production (Million Barrels per Day)

Source: Bloomberg

So, the question arises: why is shale oil extraction so complex? Compared to traditional onshore oil fields, shale oil extraction is exceptionally challenging. Oil in traditional fields is usually stored in "natural tanks" made of limestone or sandstone, where oil and gas can flow naturally. In contrast, shale oil is trapped in dense source rocks with very low porosity and permeability, meaning that oil is almost impossible to flow on its own.

In shale oil fields, you cannot simply "drill a well" and let it produce oil naturally. Instead, you need to "attack" the rock through horizontal drilling, multi-stage fracturing techniques, and massive investments in equipment, personnel, water, sand, steel, and capital, just to release a small amount of oil.

Moreover, the production of each shale oil well can only be measured in hundreds of thousands of barrels, unlike traditional oil fields that can provide millions or even tens of millions of barrels of production and sustain it for years. In contrast, shale oil wells typically can only maintain production for a few months before needing to drill another well.

This phenomenon is referred to in the industry as the "Drilling Frenzy."

Figure: Key Factors for Oil Recovery and the Potential of Venezuela's Orinoco Belt

Data Source: Burggraben Analysis

The shale revolution is one of the greatest industrial achievements of our time. It is not just a geological story; it is the result of incentives, property rights protection, technology, logistics, and capital markets all working together.

Now, compare this achievement with Venezuela, especially the Orinoco Belt. No matter how you view heavy oil, yes, it does face challenges in upgrading and processing, but from the perspective of "can we extract oil molecules from underground," extracting heavy oil from the Orinoco is much easier than from shale.

A quick glance at the chart above gives you an intuitive numerical comparison. The permeability of shale formations typically ranges from 0.001 to 0.1 millidarcy, while the permeability of heavy oil reservoirs in Venezuela's Orinoco Belt usually exceeds 1,000 to 13,000 millidarcy. This is not a simple rounding error; it is a difference of several orders of magnitude.

The same applies to porosity. The world's highest-quality Permian shale typically has a porosity of 4% to 8%, while the porosity of Orinoco heavy oil sands ranges from 20% to 38%. So, ask yourself a simple question: if political factors were excluded, which resource would you prefer to drill and extract? Which resource do you think has a lower full-cycle breakeven cost?

Figure: Resource Potential of Orinoco Belt Heavy Oil

Data Source: U.S. Geological Survey, 2009

Yes, the rapid development of U.S. shale oil has benefited from three powerful tailwinds.

First is property rights protection. In places like Texas, landowners typically own the mineral resources beneath their land, which directly incentivizes them to develop these resources.

Second is the oil services ecosystem. Texas has a large and decentralized oil services industry that can quickly mobilize and gain a competitive edge.

Third is financing capability. The U.S. has the deepest debt and equity markets in the world, allowing shale oil to receive massive funding even in seemingly unrealistic situations. Combining these factors has led to the rapid rise of the shale oil industry.

But the key is: even with these tailwinds, shale oil remains a technical nightmare compared to traditional onshore resources in the Orinoco Belt. If American capitalism can create a "Saudi Arabia" from tight rock in 15 years, then once Venezuela establishes effective property rights and basic rule of law, the global oil and gas industry will flock to the Orinoco Belt, viewing it as what it should be—the last great frontier of oil wealth in the world. Because it truly is.

Will Trump accept the political risks of nation-building in this context?

The answer is yes. This is actually his clearly stated goal, expressed in the most straightforward way a president can. You can hear him say it for yourself.

The Trump administration will not leave easily. They want to reclaim oil assets, rebuild the oil industry, and hope to compensate for past expropriated and lost assets. This is their strategy, clear and straightforward.

What is my view? I hold a very pessimistic attitude toward oil prices. Trump's statements are significant. From my perspective in the oil industry, this is a game-changer. Of course, this will not happen overnight, but it will gradually change, advancing every day. You have been warned.

Furthermore, I do not believe this administration will face the risks described by typical critics. This is not about fighting hostile insurgents in Afghanistan, nor is it about trying to implant Western institutions under Islamic political orders like those in Iran or Afghanistan, which inherently harbor hostility toward Western values.

And this is Venezuela. Culturally, it belongs to the West, with the vast majority of people practicing Christianity, and before the systematic destruction by socialists under Hugo Chávez and Nicolás Maduro, it was a successful beacon. This country can be repaired.

Now, let’s zoom out. This is not just a story about Venezuela; it is also a story about global oil prices, and thus a geopolitical story. Venezuela has the potential to structurally bring about long-term low oil prices, or at least maintain current low prices (assuming other conditions remain unchanged). If this becomes a reality, it will cut off the "financial oxygen" that funds the war in Ukraine, weakening the Kremlin's grip while significantly diminishing the geopolitical influence of certain major powers.

And before all this happens, another chain reaction may have already begun, such as the potential collapse of hardline regimes in certain countries, as they too possess large undeveloped oil reserves just waiting for the "invisible hand" of the rule of law to release these resources.

All of this will break the funding chains of terrorist financiers, whether in Qatar or elsewhere. And all of this, ladies and gentlemen, is a gospel for peace and humanity.

In the coming weeks, you will not hear these views from so-called progressive leftist "do-gooder" Marxist worshippers. But the fact is, low oil prices are one of the greatest driving forces for creating peace and prosperity. However, few truly realize this.

On the contrary, the left will raise various objections, no matter how absurd, until they inevitably find themselves standing alongside murderers and dictators. Unfortunately, this is the rule of the game for today's traditional media, which is completely partisan.

Figure: Trump's Press Conference on Venezuela, January 3, 2026

On January 3, 2026, President Trump held a press conference on the Venezuela issue. Of course, the situation in Venezuela is far from over, and the final outcome is still uncertain. But if luck, sustained courage, and the right decisions continue to accompany Trump, he may indeed deserve a Nobel Prize. From my perspective, he is currently moving in the right direction.

Therefore, credit should be given where credit is due. We should praise or criticize based on the actual performance of each action, rather than on partisan positions. President Trump and his team have done a great job.

Please do not attempt to criticize this precise and highly successful military operation for even a second. I have already paid my respects to it.

Sincerely,

Alexander

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