Monday, July 10, 2017

Venezuela? All These Years, Fake News? -- July 10, 2017

From Platts:
Venezuela’s claim of being home to the world’s largest oil reserves based on its massive Orinoco heavy oil belt has been the subject of industry skepticism for years.

The South American producer estimates it has over 300 billion barrels of proven oil, a figure naysayers believe is grossly overstated as much of its huge bitumen resources are tricky, and hence too costly, to produce.

Now two years after the biggest oil price collapse in a generation, Venezuela’s world-beating oil reserve claims are not only looking increasingly shaky but the country’s current economic and political quagmire means its recoverable oil reserves are now firmly in retreat, according to an independent study.

Norwegian oil consultancy Rystad Energy last week estimated that Venezuela’s total recoverable oil resources stand at 75 billion barrels, 24% below ago levels and less than a quarter of the official 302.3 billion barrels figure for proven reserves.

The shortfall is even more dramatic given Rystad’s approach to classifying recoverable oil resources.Unlike BP’s touchstone annual Statistical Review, which presents a mix of resource categories based on opaque official sources as “proven”, Rystad claims to take a more rigorous approach by applying Society of Petroleum Engineers (SPE) standards.

On this basis, Venezuela’s proved reserves actually stand at just 8 billion barrels, a fraction of the claimed total and less than neighboring Brazil. Even on a more generous proved and probable basis—equivalent to 2P reserves cited by oil companies as the most likely estimate of their recoverable oil—Venezuela holds 17 billion barrels, Rystad believes.
The Bakken: 500 billion bbls OOIP x 12% = 60 billion bbls. 


  1. --- Venezuela’s PDVSA Guarantees Investor Security Amid Uncertainty ---

    Venezuela’s state oil producer, PDVSA, said in a statement it is guaranteeing “legal security” for all foreign companies in the leftist-run nation, rebuffing a government adviser’s suggestion that their operations could be nationalized….

    [A] prominent government-allied lawyer said a new legislative body could rewrite parts of the constitution to ensure the state has full ownership of the oil industry…, [sparking] fears that President Nicolas Maduro’s unpopular administration could take aim at joint venture partners, which include large oil companies Chevron Corp and Rosneft….

    Venezuelan oil laws enacted under Chavez allow for minority participation of private companies in oilfield joint ventures, and numerous companies formed such partnerships despite nationalizations in the sector….

    Nationalizing oil ventures would worsen a severe drop in production in Venezuela, home to the world’s largest crude reserves. That would hurt the country’s already ailing coffers, which depend on oil sales for more than 90 percent of their revenue.

    And PDVSA has been offering more stakes in joint ventures to foreign companies, including key Russian ally Rosneft and ONGC Videsh, the overseas investment arm of India’s top explorer, Oil and Natural Gas Corp, as it tries to minimize operating costs, Reuters has reported….

    Still, as Venezuela’s political crisis worsens, a half-dozen oil industry sources consulted by Reuters said the situation was becoming more uncertain.

    “Imagine justifying to your board of directors that you put more money into Venezuela when there was an announcement from the president’s top adviser that he was going to nationalize companies,” said Francisco Monaldi, fellow in Latin American energy policy at the Baker Institute in Houston.

    “This will pour cold water (on investments).”

    1. I think the world can pretty much write off Venezuela as a viable oil-producing country until the world is literally running out of oil. Pretty sad.