Chavez Out to Prove World's Largest Oil Reserves

Discussion in 'Commodity Futures' started by K.C., Jun 28, 2005.

  1. K.C.

    K.C. Wires
    Tuesday, June 28, 2005

    CARACAS, Venezuela -- Venezuela has the largest proven oil deposits outside the Middle East, but President Hugo Chavez believes his country has the largest reserves in the world and he plans to prove it.

    In recent months, Chavez has repeatedly boasted that Venezuela's estimated 78 billion barrels in conventional reserves, coupled with an estimated 238 billion barrels of tar oil in the nation's so-called Orinoco Belt, "are the largest petroleum reserves in the world."

    According to a statement released Sunday by the state-run oil company Petroleos de Venezuela SA., or PDVSA, Venezuela's proven oil reserves have been underestimated because reserves from the Orinoco Belt were not included in previous studies calculating all the nation's oil reserves.
    The heavy crude from the eastern Orinoco region, which was marketed as boiler fuel called Orimulsion, was not included in conventional oil reserves calculated by past governments because Orimulsion was designed to compete with coal - not oil - and excluded from production quotas established by the Organization of Petroleum Exporting Countries.

    PDVSA plans to carry out a study that would include the Orinoco reserves in Venezuela's conventional oil reserves, according to the statement issued on Sunday.

    The move marks a shift in policy with previous administrations in this oil-rich South American nation.

    PDVSA has criticized past governments for selling Orimulsion at a fraction of the price of oil and have started mixing the cheap boiler fuel with lighter crude to make it marketable, and recognized as a part of Venezuela's total oil reserves.

    Industry analysts have said Chavez's government wants to increase Venezuela's proven reserves as a means of regaining negotiating power within OPEC. The country is currently producing below its OPEC quota and has no capacity to boost output, diminishing its influence in the cartel.

    © 2005 The Associated Press