Venezuelan Oil Reserves

Angie Boysen
October 24, 2010

Submitted as coursework for Physics 240, Stanford University, Fall 2010

Fig. 1: The Average Global Petroleum Consumption from 1997 to 2009. (Data from [3])

It is stated with some frequency that the world is addicted to oil. And in fact, it may be true. Petroleum is used for transportation, production of plastics, heating, electricity generation, and more. As the gold standard of energy sources, petroleum outperforms all others due to its high energy density, ease of extraction, and variety of uses. However, oil is limited resource, and we are rapidly approaching that limit. According to the CIA World Factbook (2009) and the BP statistical review of world energy (2010), there are just under 1.4 trillion proved barrels of oil world wide. [1,2] This number may seem large, but in 2009 there were 84.34 million barrels of oil used everyday, and 2009 was a slow year for oil consumption due to the economic recession. [3] This means that at the current rate of oil consumption all reported oil sources will be gone in around 50 years. Additionally, many sources predict that the world oil consumption will increase over the next few decades.

But something is missing from this picture. Both the CIA World Factbook and the Energy Information Administration (EIA) also report that Venezuela contributes 99.38 billion barrels to the world total. [1,4] However, in late 2009, the USGS reported that the Venezuelan Orinoco belt oil reserves contained an estimated 513 billion barrels of oil. [5] At current consumption rates this reservoir alone is enough to supply the world with oil for over 16 years. Why do the numbers for Venezuela have this discrepancy?

Fig. 2: Countries with the largest proven oil reserves as reported by [1] and [4].

There are two likely reasons for the omission of these reserves. Firstly, the oil from the Orinoco belt is not conventional oil, but heavy and extra-heavy oil, sometimes described as tar sands. This substance is much higher density and viscosity than traditional oil, and thus is much harder to extract and refine. It does, however, result in the same outputs as conventional oil despite a more intensive production process. The Orinoco reserves came under the control of the Venezuelan government-run Petróleos de Venezuela, S.A. (PDVSA) in 2007, when the company outlined a plan designed to improve the refining and processing capacity and infrastructure. Since the Orinoco belt oil reserves aren't currently being mined and are using money (to generate production capacity) rather than producing money, they may not fit in the definition of 'proven oil reserves'. Though current technology exists that would enable extraction of the extra-heavy oil, the infrastructure is not yet set up in Venezuela and thus these reserves aren't being tapped, and so perhaps are not being taken into account.

The second reason that the Orinoco oil may not be included in the figures from the CIA World Factbook and the EIA is the political climate in Venezuela. Hugo Chavez, the socialist president of Venezuela is critical of the United States. Though the two countries are mutually dependent on the oil exported from Venezuela to the US, both governments are critical and suspicious of the other.

There are an estimated 80 billion barrels of conventional oil in Venezuela, and current export rates according to the U.S. government and the International Energy Agency are roughly 2.4 million barrels per day. The Venezuelan government, however, says PDVSA's production is about 3.3 million barrels per day. [6] As this difference in reported production illustrates, the Venezuelan government and government controlled PDVSA have not always proved the most stable or reliable of oil production companies, even when dealing with conventional oil. A manager strike in 2002-2003 reportedly cost the country $12.8 billion and claims of corruption riddled the company in 2007. [7,8]

Since the government took control of PDVSA and the associated Orinoco projects there has been some hesitancy on the part of foreign investors and prospective oil companies. This is due to the demands of PDVSA for operational control and around 60% share in any project. [9] Recently, however, these demands haven't stopped China from signing a contract that equates to around $40 billion of investment over the next 5 years. [10,11]

It remains to be seen how Venezuela will utilize the largest oil reserve in the world. However, the very existence of these tar sands promises an extension of extra time before the world has to figure out how to cope without oil. The oil at Orinoco likely promises controversy as well, because controversy and oil so often go hand in hand.

© Angie Boysen. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] CIA World Factbook, U.S. Central Intelligence Agency, 2010.

[2] BP Statistical Review of World Energy 2010 (British Petroleum, 2010).

[3] "International Petroleum Monthly," US Energy Information Administration, October 2010.

[4] "International Energy Statistics," U.S. Energy Information Administration, 2010.

[5] "An Estimate of Recoverable Heavy Oil Resources of the Orinoco Oil Belt, Venezuela," US Geological Survey, Fact Sheet 2009-3028, October 2009.

[6] C. J. Alvarez and S. Hanson, "Venezuela's Oil Based Economy," Council on Foreign Relations, Backgrounder, 9 Feb 09.

[7] C. Camacho, "Minister: 2002-2003 Strike Cost PDVSA US$12.8bn," Business News Americas, 27 Jul 05.

[8] S. Romero, "Political Clashes Shake Venezuela's Strained Oil Industry," New York Times, 23 Jul 07.

[9] "Venezuela's Oil Policy, A Sticky Proposition," The Economist, 3 Sep 09.

[10] A. Cala, "China Roots Spread in Latin America with New Deals," Energy Tribune, 22 Dec 10.

[11] "China's Sinopec to Have a Stake in Orinoco Oil Belt," El Universal, 2 Dec 10.