Venezuela may not be one of the top five oil producers in the world, but it currently holds the status of having the world’s largest proven oil reserves. Proven oil reserves are those that can be estimated with a reasonable degree of confidence. They must also be economically feasible to extract under the prevailing economic conditions, so proven oil reserves can vary according to the price of oil.
In 2009, Venezuela reported conventional oil reserves of just over 211 billion barrels. While this is surely a significant amount, it was not enough to dethrone Saudi Arabia from the top spot. Venezuela surpassed Saudi Arabia’s proven oil reserves in 2011 when the oil sands deposits of the Orinoco Belt were included in the figures.
Oil sands are a naturally occurring combination of sand, water and clay that is saturated with bitumen, an extremely viscous and dense form of petroleum. The United States Geological Survey (USGS) estimates that the Orinoco Belt could hold 900–1,400 billion barrels of heavy crude with perhaps 380–652 billion barrels being recoverable, at least in theory.
While the USGS evaluated the technical aspects, it remains to be seen if extracting the ultra-heavy crude from the Orinoco Belt will be economically feasible at current prices. It is quite likely that Venezuela’s proven reserves will need to be downgraded unless the price of crude rises.
The sizeable oil reserves have not always had a positive effect on the country, which has three times suffered from the so-called Dutch Disease, a phenomenon that occurs when the increasing income from a certain commodity (in this case oil) strengthens the currency, thus harming exports from other sectors.
A number of disputes are also pending from the nationalisations that took place during President Hugo Chavez’s 1999-2013 rule. For example, ExxonMobil, which makes high-performance transmission fluids like Mobil ATF LT 71141, was due to receive $1.4bn in compensation from the country, but this has recently been overturned, at least in part, by the World Bank’s International Center for Settlement of Investment Disputes.
Today, the economic crisis in Venezuela belies the country’s vast oil wealth. Food and other essentials are commonly in short supply, with people becoming accustomed to long queues just to buy basic goods. Venezuela’s president has also appealed to the United Nations to boost medicinal supplies, because hospitals are thought to have less than 5% of the medicines they need.