Venezuela — Alo Presidente!

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In a world where the National Petroleum Council talks about “continuing risks” to the oil supply, Venezuelan president Hugo Chavez is said to pose a significant threat to the interests of the Organization for Economic Co-operation and Development (OECD) member countries. Venezuela’s production has declined since 2000, and the country is home to the world’s largest unconventional resource under development, the Orinoco extra-heavy crude. A lot is at stake in Venezuela, so it is prudent to assess the risk there now and down the road. Do Venezuela’s policies affect the peak of global oil production?


…The EIA’s reserves page cites three different estimates for Venezuela’s conventional oil. According to BP and the Oil & Gas Journal (Pennwell), Venezuela’s conventional oil reserves amount to approximately 80 billion barrels. World Oil (Gulf Publishing) put the country’s reserves at 52.650 billion barrels in September, 2006. This latter figure is remarkably close to the suspicious OPEC doubling to 56.3 billion barrels that occurred in 1988. Since that year, Venezuela has produced about 17.7 billion barrels, most of which was conventional oil (the rest came from the Orinoco formation, see below). The World Oil estimate allows for ample reserves growth in this period, but the other estimates have only grown over the years. Market analyst Joe Duarte raises the possibility of “irregularities” within PDVSA, saying that “over the last few years numerous questions have been raised, not just about PDVSA’s actual oil reserves and production capacity, but also about PDVSA’s finances” (Rigzone, May 2, 2006). The conventional reserves question warrants further investigation, but given Venezuela’s nationalization of its assets, we can expect less data transparency, not more.

ASPO-USA