Venezuela oil reserves may be twice the size of Saudi Arabia's
Posted by BusinessIntelligence Middle East
Source: BI-ME and agencies , Author: BI-ME staff
Posted: Sat January 23, 2010 3:41 pm


INTERNATIONAL. A new US government assessment of Venezuela's oil reserves could give the country double the supplies of Saudi Arabia.

Venezuela's Orinoco oil region contains about 513 billion barrels of crude that could technically be recovered by energy companies if cost were not an issue, the report said on Friday.

Scientists working for the US Geological Survey say Venezuela's Orinoco belt region holds twice as much petroleum as previously thought.

This assessment is far more optimistic than even the best case scenario put forward by President Hugo Chavez.

It is the largest crude oil resource assessment ever done by the US Geological Survey for one area and its first for the Orinoco Oil Belt, a region in central Venezuela that contains heavy, thick crude that does not flow very easily.

Not all the region's oil in the USGS' resource estimate could be drilled at a profit, but the agency does not have a projection on how much of the Orinoco oil could be profitably drilled.

"We don't say anything about the economics of the oil," said agency spokesman Chris Schenk.

Schenk said the estimate was based on oil recovery rates of 40% to 45%.

The agency said its new estimate on the region's oil resources was based on advances in technology and new understanding in geology that "allow us to assess how much is now technically recoverable."

Petroleos de Venezuela SA (PDVSA), Venezuela's state oil company, has not commented on the news. However, Venezuelan oil geologist and former PDVSA board member Gustavo Coronel was sceptical.

"I doubt the recovery factor could go much higher than 25% and much of that oil would not be economic to produce", he told Associated Press news agency.

Other recent discoveries such as the one in March 2009 in Brazil or in the Gulf of Mexico later in the year have pushed some industry analysts to re-think 'global peak oil', or the idea that global production is near an apex after which it will decline sharply.

If the UGS assessment proves to be even remotely correct, it could have a substantial effect on the economics of oil, the geopolitics of Venezuela over the next decade as well as putting to bed 'peak oil.'

The theory of peak oil was first suggested by geoscientist Marion King Hubbert, who in 1956 predicted US oil production would peak between 1965 and 1970.

Figures from the US government Energy Information Administration show crude oil production peaked in the United States in 1970.

The Hubbert peak curve is a bell-shaped model of production for a particular country, region or the world, given an assumed total recoverable volume

Venezuela holds the largest oil reserves outside the Middle East. Saudi Arabia has proven reserves of 260 billion barrels.

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