The Decibel - What the Venezuelan attack means for Canadian oil

Episode Date: January 6, 2026

U.S. President Donald Trump was clear on Saturday when he announced his administration’s plans for the future of Venezuela: “We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” he told the world.But how feasible is that? How quickly could it happen? And even if U.S. oil companies do return to Venezuela and increase their exports, what will that mean for Canada at a time when our oil industry is trying to diversify its export base?Jeff Jones writes for The Globe’s Report on Business. He first started reporting on the oil sector in the 1990s. He joins the show to explain the state of Venezuela’s oil sector, what obstacles lie ahead for it and what this all means for Canada’s economic sovereignty.Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

On Monday, the fallout from the U.S. attack on Venezuela continued. Venezuelan President Nicolas Maduro entered a court in Manhattan and pled not guilty to drug trafficking, weapons, and terrorism charges. Late Sunday, U.S. President Donald Trump continued to threaten more military action in the Western Hemisphere, specifically calling out Colombia. Colombia is very sick to run by a sick man. who likes making cocaine and selling it to the United States. And he's not going to be doing it very long, let me tell you.

What does that mean? He's not going to be doing it very long? He's not doing it very long. So there will be an operation by the U.S. and... It sounds good to me. The Venezuelan Vice President, Delci Rodriguez, who is now in charge of the country, struck a softer tone with the U.S. She wrote in an Instagram post that the Venezuelan government invites the U.S. government to collaborate with it on a quote,

agenda of cooperation. But what Trump really wants cooperation on is oil, which he has made very clear. We're going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country. Trump has also stated that oil is central to his motivation for capturing Maduro, ahead of any democratic reforms. We haven't gotten to that yet.

Right now, what we want to do is fix up the oil, fix up the country, bring the country back, and then have elections. A U.S. takeover of Venezuelan oil production could have major implications for global oil supply, and by consequence, Canada's oil industry. But that's a big if, because there are a lot of. lots of obstacles in the way. Today, I'm talking to Jeff Jones, who writes for the globe's report on business and is one of our in-house experts on oil. He'll explain how Venezuela has managed its oil over the years, what U.S. oil companies would need to do to ramp up production in Venezuela,

and importantly, what it means for Canada's economic sovereignty. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Hi, Jeff. Thanks so much for joining us today. It's great to be here with you. And we're going to be talking all about oil. And you reminded me earlier that we actually talked about oil 10 years ago when I was in the video department. Yeah, it's just the perennial newsmaker. And of course, we know this is a very fast moving file.

So just want to say we're talking today, Monday, January 5th, at about 1.30 Eastern time. So, Jeff, Maduro being captured by the U.S. is, of course, a very big deal. But can you put that into the context of the global oil market? And specifically, Canada's oil industry, what does it mean that the U.S. is saying it wants to take over the country's oil production? You know, in the short term, it probably doesn't mean too much in terms of the global oil markets. You know, we've been in a period of oversupply, and that's driven prices down. And we've seen, as markets have opened up following the weekends, nabbing of, President Nicholas Maduro from Venezuela, that markets have been somewhat muted. I mean,

their prices up a little bit, but not in any great way. What does that tell you? That tells us that the world oil market is very well supplied and that traders are taking a wait and see approach to the ability of the oil industry and specifically the U.S. oil industry to restart an oil industry in Venezuela that is suffered from years of mismanagement and underinvestment. Okay, and we'll get into all of that in a bit. But let's lay out some groundwork here when it comes to Venezuela and oil. So Venezuela says it has the world's largest proven oil reserve at just over 300 billion barrels of oil.

What does that mean exactly? What that means is it's got a lot of oil. Specifically, the type of oil that can be presumably produced. at an economic value. So that's what proved reserves are. Okay. Interesting. So let's put that into context. How does that compare to reserves elsewhere in the world? That puts it at number one. If you think about Canada by comparison, Alberta, those reserves are estimated at 170 billion barrels, so kind of half. Canada is number four on the list of oil reserve holders.

Okay. And then I think what Saudi Arabia is number two at 250 billion barrels, Iran three, at around 200 billion barrels. Yeah. So we're talking about a world that still has a lot of crude oil still left in it. Right. Okay. So I guess that kind of puts Venezuela as this kind of classic example of a petro state.

But extracting that oil isn't that easy in Venezuela. Can you explain what kind of oil Venezuela has? Well, similar to Canada, it has very heavy, goopy oil that requires a lot more processing than you would see from light crude that they produce in large volumes in Texas, say. So that puts Venezuela's crude potentially in direct competition to what Canada produces in huge volumes right now. Okay. I imagine that also based on that type of oil, that it's like only specific places that can refine it. That's right. In the U.S., and that's the big customer that both countries would be serving.

You've got big refining complexes in different parts of the country. Canada serves largely the U.S. Midwest, so refineries in Minnesota, Illinois, Michigan, Indiana, and also has access to the U.S. Gulf Coast. That is where Venezuelan crude would presumably start to resupply, of its access by a tanker. Okay. So obviously the price of oil goes up and down all the time, but you would imagine that a place like Venezuela,

who is oil rich, that they would be, I don't know, economically thriving, but that's not exactly the case here. How has Venezuela managed their oil reserves? Poorly. I mean, what's happened is there's been a major mismanagement of the oil resources and the infrastructure for many, many years in Venezuela and under investment as well. It used to be the purview of U.S. oil companies such as ExxonMobil, Conoco Phillips, and Chevron, under former Venezuelan President Hugo Chavez, those resources were

largely nationalized. Those companies were told to make deals with the state oil company called Petrolios to Venezuela or Pedevesa. Two of them decided not to do it and had their operations now. nationalized. That was ExxonMobil and Conoco Phillips. Chevron is the only remaining oil company in Venezuela, and it is essentially paid by the oil that it produces now. Production has absolutely tumbled since the beginning of the century. It produced about three million barrels a day back in that era, and now it's fallen to somewhere around one million barrels a day. The major customer for Venezuela now is China. Okay, wow, interesting.

A couple things I want to pull out there. When you talk about nationalization, can you kind of explain what that means? Because there were U.S. companies that were working there, and then, of course, they left, or most of them did. I explain what that means when a country nationalizes its oil industry. You know, it's really interesting that Venezuela was one of the founding members of OPEC. From 1960, the organization of the petroleum exporting countries, which was established to repatriate all of those oil assets that had been largely controlled by the world oil majors

from both the United States and Europe. And this was a way for these countries, Saudi Arabia is another one. You can go down the list of OPEC members have all said, we want to be able to control our resources, not have that control dictated by the world's oil industry. So this basically happened again in Venezuela's period following 1999 when Chavez came to rule. And with that nationalization, they said, well, we own the resources. Oil majors, you're going to have to either strike deals with our state oil company or find some way to leave the country because we're not going to be dictated to by oil companies.

Okay. And you mentioned there that Venezuela mismanaged its oil industry. Can you explain that? Well, for the longest time, I mean, Venezuelans paid like the lowest prices for gasoline in the world. It was heavily subsidized. In the period since 2000 or so, a lot of the spoils went to propping up the government of Venezuela. And, of course, relations with other countries soured, especially the United States. states which put sanctions on that crude oil. So the revenues just tumbled. And I understand also they didn't actually save any of this oil money, right? That's right. The economy of Venezuela is in tatters. There's no doubt about that. So we talked about how these American companies left Venezuela after the nationalization happened. So I wonder, when Trump says that Venezuela has stolen American assets. We built Venezuela oil industry with American talent, drive, and skill, and the socialist regime

stole it from us during those previous administrations, and they stole it through force. This constituted one of the largest thefts of American property in the history of our country. Is that what he's referring to? Is he referring to kind of the equipment, all the stuff that was there from the American companies? Is that what he's referring to? Well, I'm not the Trump whisperer, and I have questions about people who think that they are. But I will say that this is what he seems to be talking about. Those nationalizations after oil companies from the U.S. had put capital spending into the country's oil industry, and then it was nationalized.

Okay. So one American company, Chevron, is still operating in Venezuela. How is that? That is, they've decided to, you know, sign on to. that nationalization deal that Venezuela dictated back in that period. And, you know, they have not really been paid in cold hard cash because of the difficulties in that country. From everything that I've been reading on this situation, it seems that they've been able to take their payments in oil rather than hard currency. You mentioned that Venezuela currently produces about a million

barrels of oil a day. How does that compare to how much oil Canada exports? Okay, well, so let's talk about this a little bit. The two countries have gone in complete opposite directions when it comes to their ability to produce an export to the United States. Venezuela has gone from exports to the U.S. of about a million barrels a day in 2013 to volumes now that are at times zero. Basically, it's a trickle. And this is largely because of the sanctions that the U.S. slapped on Venezuela. And Canada, on the other hand, has gone great guns. I mean, so in 2013, let's give it the same timeline. In 2013, Canada exported 2.7 million barrels a day to the United States. In 2024, that rose to nearly 4.4 million barrels a day, which is a lot of oil. It makes

Canada, by far, the dominant supplier of foreign oil to the United States. In 2025, that number has fallen a bit, and that is largely because of volumes that have been shifted to the newly expanded Trans Mountain Pipeline, which runs from Alberta to the Pacific Coast at Burnaby. And, Jeff, you mentioned sanctions. And just to say that the U.S. imposed oil sanctions on Venezuela in 2019. And that really goes to show how long. this dispute that the U.S. has had with Venezuela has lasted, especially under Trump. I mean, this was back in Trump, one, that this happened. And, of course, this year, it ended up with a military buildup, the bombing of purported drug boats,

culminating in the capture of Nicholas Maduro and his wife this past weekend. We'll be right back. So, Jeff, you've laid out the state of Venezuela's oil industry. Let's talk a bit about what that means for Donald Trump's plans. So the U.S. president said he intends for American oil companies to return to Venezuela to rebuild its oil industry. But how feasible will that be for the U.S. to ramp up oil production in Venezuela? There are a lot of variables in that statement.

How long is it going to take for the Venezuelan society to be a stable place? It's only been two days. We don't know how the population there is going to respond to this purported U.S. control of the country, whether that's going to stick, whether there's going to be opposition, whether there's going to be unrest. We just don't know that. So a lot of the speculation about the oil industry and its ability to re-ramp is pretty much that, just rank speculation at this point. But there's a great report out from TD Security. that give some different scenarios. And with regard to timing, the shorter period of time it takes for the Venezuelan oil industry to resume producing oil in large volumes, the more negative that could be for oil prices and specifically competition with Canadian producers. What are some of the other obstacles that could stand in the way of ramping up oil production? You talked about political stability, but are there other things like labor?

for example? Labor is a problem and also just mechanical. I mean, you know, think about if you left your car out in a field for 20 years, you know, parts would fall off. It would rust. It would seize up. It might be difficult to find parts to replace things. I mean, so the infrastructure is in bad shape.

You know, it's hard to find any type of projection that says that things can get underway, you know, before five years. I mean, and that's being optimistic and think about other things, financing, the ability of these companies to say, well, we want to spend in a place that is geopolitically risky compared to our other operations, which we know much better. They won't know what they're dealing with until they get there, assuming that they'll be allowed to come back in in any expedited way. So five years optimistic, what could be like the other end of that, like how long could it take to get together? this production up and running? Well, I mean, that's open-ended. It really depends on the political situation at the time. Oil markets, where oil prices are going to be, there's a lot of things at play. Have any American companies said anything since Trump spoke on Saturday? The only real

comment I've seen so far was from Chevron, and they weren't talking about their plans for the region. They were just talking about how they were keeping their employees. he's safe, basically giving some comforting words to people who might be employed there or know people who work in that region. Okay, so let's say, let's kind of do a thought experiment here, Jeff. Let's say that the U.S. is successful at overcoming these obstacles, right? Which I know I recognize is a big if, but what kind of effect would that have on oil prices? Well, as I said right now, there is a over supply of crude. So prices have been much lower than

had been predicted at the beginning of last year. I think we're still under $60 a barrel. So that says that there seems to be little fear of any kind of shortages or disruptions anywhere in the world. But let's talk about North America specifically because really that is the most germane to our discussion about Canada. So the oil, as we talked about earlier, the oil in Venezuela, specifically from what's known as the Orinoco Oil Belt, is very similar to the bitumen that's produced in the Fort McMurray and Cold Lake regions of Alberta, right?

When it finally can be shipped to the U.S. in large volumes, where it will compete with Canadian oil is in the U.S. Gulf Coast region. And so that could mean lower returns for Canadian producers there. There have been some warnings I've seen on social media about Canada losing its ace in the whole with regard to its ability to discuss trade with the United States. It's bargaining chip. And I had a discussion on the weekend with Rory Johnston, who is a Toronto-based energy analyst, very smart guy, friend of the Bureau. And he was saying, you know, you have to kind of take a step back and look at the infrastructure that's in place with regard to how Canadian oil gets to the United States. It hasn't been forever that Canadian crude has been able to ship via pipeline to the U.S. Gulf Coast, right?

That's sort of just in the last couple of decades that's been able to happen. Its main market, and where Canadian oil still dominates, is those refineries in the Midwest and in the Rocky Mountain region, but specifically the Midwest, Venezuelan crude can't really get there. There's not any type of economic transportation system that allows it to go there. So, I mean, Canada kind of has a lock there. So really, the focus is the Gulf Coast. What happens then? Well, Canadian crude can be re-exported from the Gulf Coast if there's money to be made doing that and can also be shifted to whatever capacity is available on this expanded trans-mountain pipeline to the West Coast.

This brings us, of course, to the famous MOU that was discussed between Ottawa and Alberta late last year. And I'm happy to have that discussion. Yeah, yeah, let's talk about that because, yeah, at the end of 2025, Alberta Premier, Danielle Smith, And Prime Minister Mark Carney announced a memorandum of understanding, the MOU, around oil development. And that included steps to build another pipeline to Canada's West Coast. So does the attack of Venezuela make a pipeline more or less of a priority? It's really difficult to see at this point whether it strengthens Daniel Smith's hands. It kind of looks like it does, at least in the short term.

But these discussions are going to take a long time. talking about another million barrels a day of capacity to the West Coast. The only question is where it's going to go and whether there will be a private sector investor to take up the cause, because those things aren't decided yet. But certainly if you look at some of the chatter over the weekend, those folks that are adherence to the pipeline faith certainly say that indeed this is an event that gives more impetus to building a pipeline to the West Coast. All of the things that are still working against that are still in place, however. Why do they say that it's more of an impetus to build a pipeline?

Well, if the next geographic region of competition is the U.S. Gulf Coast, and we don't know when that's going to happen, as we've already said, that could be five years, it could be 10 years, then the argument that Canada needs to diversify its markets becomes certainly louder and there's more of a business case behind it. Interesting. I mean, if Trump allows that, of course. If Trump allows that. Yeah.

And don't forget, I mean, you know, this is a discussion that people are kind of hesitant to have. I mean, we've already seen the Trump administration show its desire to take over. Greenland, for instance. We don't know if this renewed Monroe doctrine way of dealing with this hemisphere also means dominating Canada. I mean, you know, we shouldn't get too fearful of that type of thing. But if you take a look at discussions that were being had even two years ago, where we are now seems like an impossibility. Yeah, I know. So let's go back to this thought experiment. And of course, if all goes according to Trump's plan and the U.S. does start to export Venezuelan oil. Does that change the economics of a pipeline project if the price of oil drops?

Yeah, if the price of oil drops, it certainly does, especially if we continue to build pipelines that are well over budget, well behind schedule, because certainly that means higher tools for producers. And there's a point at which transportation costs get too high in terms of allowing some kind of rate of return. When you say tools, what do you mean? Shippers on pipelines have to pay transportation charge for every barrel they ship. And that is based on a number of factors,

including the cost to build a pipeline, the debt that it has taken on that has to be serviced. So regulators set that price. So theoretical second pipeline aside, we already have a pipeline that can get Canadian oil to the coast, the Transbounden pipeline, which isn't running at full capacity. So could we get out in front of any potential U.S.-Venezuelan oil competition

by increasing our exports to Asia now? It doesn't hurt. I mean, you know, tolls notwithstanding, there is discussion already about being able to expand the capacity of that pipeline again through ways other than actually putting more pipe in the ground. So increasing the horsepower, putting in an agent, that allows the oil to move faster. We can fill more tankers in Burnaby

and send them to Asia. And that also helps to allow Canadian crude to fetch world prices as opposed to what was the case when we spoke 10 years ago. And that was having to deal with extremely wide price discounts in the United States

because that was essentially Canada's only export customer at the time. Okay. So to end here, Jeff, after what you've laid out, how worried should we be? Like, what does the U.S. seizing control of Venezuela's oil industry mean for Canada sovereignty economically or otherwise? You know, I think it's probably not a good sign, really. I mean, it shows that the Trump administration is throwing its weight around in this hemisphere. And we get back to that discussion

about spheres of influence that we've heard about, you know, with the three major powers that remain in the world being the United States, Russia, and China. You know, it seems that the U.S. administration is bent on showing its dominance in North and South America. It's tough to imagine that at some point, Canada won't enter the conversation, especially when it comes to the review of the Kuzma agreement later this year. So certainly it's something that will weigh on any type of trade discussion and certainly any type of geopolitical allyship that Canada has had with the United States in the past. A sobering thought to end on.

Jeff, thank you so much for coming on the show. Appreciate it. Thank you very much. That was Jeff Jones, one of the journalists in the Globe's report on business that writes about oil and the energy sector more broadly. That's it for today. I'm Cheryl Sutherland. Our producers are Madeline White, Michal Stein, and Ali Graham.

Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.