Why rebuilding Venezuelan oilfields won't be easy or cheap

Nobody knows exactly how much it will cost to rebuild Venezuela's broken-down oilfields, but everyone agrees it's a lot — and there's no guarantee that U.S. companies will be chomping at the bit.Why it matters: "There is no quick and easy solution to the problems that accumulated over a quarter century," Raymond James analyst Pavel Molchanov said in a note. The big picture: Venezuela's crude output has dwindled to well under one million barrels per day after years of underinvestment, mismanagement, and sanctions — a far cry from around 3.5 mbd in the late 1990s.State of play: Don't expect a huge boost unless and until there's a secure operating environment, clear fiscal regime, an easing of sanctions and more. Some production could be revived relatively quickly by growing output from existing and still-operating wells, analysts say.What they're saying: "I think that the low-hanging fruit could probably bring another half million barrels per day to the market from Venezuela," Center for Strategic & International Studies oil scholar Clayton Seigle said at a briefing Monday.He sees a 1-2 year time frame and steps like replacing well casings, more subsurface stimulation to allow trapped oil and gas to flow more freely to for extraction, mechanical pressure increases, and more. President Trump told NBC News on Monday that the U.S. may subsidize an effort by oil companies to rebuild the country's energy infrastructure — a project he said could take less than 18 months."I think we can do it in less time than that, but it'll be a lot of money," he said. "A tremendous amount of money will have to be spent and the oil companies will spend it, and then they'll get reimbursed by us or through revenue."Yes, but: Getting output back to former highs is a vastly heavier and time-consuming lift, Seigle and others note. Think investment in electricity, pipelines and other "midstream" infrastructure, and new and upgraded plants that ready Venezuela's heavy oil for refining.By the numbers: Researchers with Columbia University's energy think tank estimate that reaching around 2.5 mbd would take $80 to $90 billion of investment in oil infrastructure over six or seven years.A new Rystad Energy analysis estimates an all-in cost of $183 billion needed to get north of 3 mbd over 15 years, split between state-owned PDVSA, national spending and private operators.What we're watching: Whether U.S. producers — the ones with the balance sheets and know-how to operate there — confirm Trump officials claims' that they want in. Modest prices and opportunities elsewhere are headwinds. But a new Wood Mackenzie note argues that oil majors and state-owned giants will still find Venezuela tantalizing, with proximity to Gulf Coast refineries an added attraction.