Venezuela has the world’s largest proven oil reserves and is one of the founding members of OPEC. Despite this, their 2.5m bpd of oil production accounts for only 3% of global output. Venezuelan oil production declined over the last decade owing to complex geology and a difficult investment climate. However, several large IOC-operated gas fields offshore Venezuela could now offer some positivity.
The Hydrocarbon El Dorado
Venezuela’s 300bn bbl of oil reserves account for 18% of current global reserves. But 220bn bbls of these reserves are onshore in the Faja, or Orinoco heavy oil belt, which has produced around 1.3m bpd in recent years. Venezuelan heavy oil grades are a key part of world oil supply: many US refineries were designed to take its heavy grades of oil together with lighter Arab crudes, meaning the country is also important for the tanker market. But production from the Faja is expensive and technically challenging, and heavy crudes sell at a discount.