Geopolitics vs. Economics: Why Oil Giants Are Betting on Libya Over Venezuela

While the Trump administration continues to advocate for U.S. energy firms to revive Venezuela's crippled oil industry, a quieter shift is underway in boardrooms across Houston and London. For international oil companies weighing long-term capital commitments, Libya—not Venezuela—is increasingly the destination of choice. This preference underscores a harsh reality: in today's energy landscape, manageable costs and credible timelines often trump sheer resource size and political ambition.

Oil production cannot be switched on overnight. Developing new capacity requires years, consistent investment, and stable operating environments—conditions starkly absent in Venezuela. Despite possessing the world's largest proven oil reserves, the country's heavy crude is expensive to extract, with production costs estimated between $60 and $80 per barrel. Its infrastructure is severely degraded, and analysts estimate a meaningful revival would demand over $100 billion and a decade of work. Add to this the geopolitical uncertainty surrounding U.S. policy, and the investment case weakens considerably.

"The calculus is fundamentally economic," said a senior executive at a European major, speaking on condition of anonymity. "Libya offers a break-even cost below $10 a barrel and existing infrastructure linked to European markets. Venezuela is a multibillion-dollar question mark."

Last week in Tripoli, at a gathering of international investors and energy executives, the mood was cautiously optimistic. Libya aims to boost output to 1.6 million barrels per day by year-end, with ambitions to reach 2 million bpd by 2030. Recent commitments, like a planned $20 billion investment by TotalEnergies and ConocoPhillips, signal growing confidence. However, the deal hinges on the Libyan government covering 60% of the capital expenditure—a significant hurdle given the country's fractured political and economic state.

Libya remains divided between the UN-backed Government of National Unity in Tripoli and a rival administration in the east. Oil exports face frequent disruptions. Yet, for investors, these risks are seen as more visible and manageable than the profound economic collapse and political isolation of Venezuela.

The upcoming announcement of winners from Libya's first oil exploration bidding round in over 17 years, scheduled for February 11, is expected to draw further international interest. The presence of Trump's senior adviser for Arab and African affairs, Massad Boulos, in Tripoli recently also signaled Washington's openness to deeper energy cooperation.

In an era of ample supply, new investments are scrutinized relentlessly. The last frontiers for oil are in complex environments where perfect governance is a fantasy. The winning formula balances identifiable risk, controllable costs, and a plausible path to production. For now, Libya—with all its flaws—meets that test better than Venezuela.

Michael Thorne, Energy Analyst at Global Risk Advisors: "This isn't about politics; it's a cold, hard numbers game. Libya's cost structure and geographic location give it a tangible advantage. Venezuela's reserves are a stranded asset without a credible plan to monetize them."

Sarah Chen, Portfolio Manager at GreenRock Capital: "The momentum in Libya is real but fragile. These billion-dollar commitments act as a stabilizing force, giving rival factions a shared economic incentive. It's a high-stakes bet on peace through profit."

David Riggs, Former Field Engineer in Venezuela (now independent consultant): "Trump's push for Venezuela is a fantasy divorced from engineering reality. The wells are ruined, the talent has fled, and the required investment is astronomical. It's a testament to failed ideology over basic economics. Meanwhile, we're pouring money into another fractured state? The industry's short-termism is breathtaking."

Elena Rossi, Professor of Geopolitics, University of Milan: "This shift highlights a new pragmatism. Companies are navigating a multipolar world by prioritizing operational viability over alignment with any single nation's foreign policy objectives. Energy security is being redefined by spreadsheets, not slogans."