Venezuela's proven oil reserves have surpassed Saudi Arabia's for the first time, making it the most oil-rich nation in the world, according to the Organization of Petroleum Exporting Countries.
In its 2010-2011 Annual Statistical Bulletin, OPEC said Venezuela's proven oil reserves spiked 40 percent in 2010 to reach 297 billion barrels. Saudi Arabia, the long-time leader in the category, had 265 billion barrels of proven reserves, according to the online report, which will be published in November.
During his 12 years in office, President Hugo Chávez has used the nation’s oil wealth and the state run PDVSA oil company to finance his “21st Century Socialism” and bankroll projects in allied countries such as Cuba, Haiti, Bolivia and Nicaragua.
The new reserves are being fueled by finds in the existing fields of Barcelona, Maracaibo and Barinas, as well as off-shore projects and in the Orinoco, Venezuela’s Ministry of Communication and Information said in a release Tuesday.
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But the figures are also a matter of debate. About one-third of Venezuela’s reserves are extra heavy crude, which is difficult to extract and only economically feasible to recover when the long-term price of oil is above about $70 a barrel, said Jorge Piñon, a research fellow at Florida International University and the former President of Amoco Latin America.
The cash-strapped PDVSA may have trouble raising the funds to tap that oil, he said.
“You can be sitting on the largest reserves in the world but if you do not have capital and technology to recover themthey are worthless,” he said.
Despite Venezuela’s oil wealth, its economy is struggling. Venezuela was the only OPEC nation to see its economy shrink between 2009 and 2010. And it’s seeing annual inflation of 24 percent — the hemisphere’s highest.
The oil sector itself is also facing problems. Venezuela’s oil production has fallen steadily over the last five years, and dipped 0.8 percent from 2009 to 2010 to 2.85 million barrels per day, according to OPEC. That comes while neighboring Colombia and Brazil saw crude production rise 17 percent and 5.3 percent respectively.
Venezuela was also the only country in Latin America to have lost refinery capacity in recent years.
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