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VenEconomy : Prophecies or lies?



 

This Monday's Gaceta Oficial (February 14) contained a resolution that adds 86.4 billion barrels to Venezuela's “proven” reserves, which would bring the country's total “proven” reserves to 296.5 billion barrels.

This is a whopping lie. According to analysts, among them Gustavo Coronel and Diego González, it is simply not true that the country has nearly 300 billion barrels of “proven” oil reserves.

For a start, Venezuela's conventional oil reserves are in the order of 40 billion barrels. However, the reserves now being proclaimed by the Chávez administration are the extra heavy oil reserves in the Orinoco Oil Belt.

It has been known for the past 40 years that there are more than 1.3 trillion barrels of extra heavy oil in the ground in the Orinoco Oil Belt.

But, in order for a barrel “in the ground” to become a “reserve” barrel it has to be possible to bring it to the surface with current technology and at a reasonable cost. Based on that criterion, only 10% (130 billion barrels) of the oil in the Orinoco Oil Belt can be classified as part of the country's oil reserves.

In other words, the true reserves would be in the order of 170 billion barrels (=40 billion barrels of conventional reserves plus 130 billion barrels of extra heavy crude), sufficient to maintain a rhythm of production similar to today's for nearly 200 years.

But it seems that the Chávez administration likes to boast that it has the biggest reserves in the world, more than Saudi Arabia's, and has reached this absurd conclusion by juggling the figures. It has “calculated” that 20% of the reserves in the Orinoco Oil Belt can be brought to the surface, despite the fact that the technology for doing this does not exist. Perhaps by the 22nd century the necessary technology will exist, at which time, it will be possible to recall Chávez and his administration as great prophets. For now, however, they can only be considered tremendous liars.

Now, regardless of the true volume of Venezuela's reserves (40, 170 or 296.5 billion barrels), the fact is that oil in the ground is no use whatsoever unless investments are made in the infrastructure needed to bring it to the surface.

The sad fact is that the “new” PDVSA is not even investing enough to keep its existing wells operating in optimum conditions. Proof of this is that it is only producing 2.5 million barrels a day when, in 1998, the “old” PDVSA was producing 3.5 million barrels a day and it was estimated that by 2011 production would be at 6 million barrels a day.

 

 


VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was originally published by Veneconomy , on February 17, 2011. Petroleumworld reprint this article in the interest of our readers.

All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld,

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Petroleumworld News 02/18/2011


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