Venezuela's vast oil and gas reserves face hurdles in economic conversion due to high costs and infrastructure issues, despite their immense value.
Şenol Vatansever, President of the Global Information Association (BİDER), stated that Venezuela's oil and natural gas reserves rank among the highest underground resource potentials in the world in terms of theoretical monetary value. However, he noted that converting this potential into economic value remains limited due to high costs, long investment durations, and infrastructure deficiencies.
Venezuela's proven oil reserves are approximately 303 billion barrels, predominantly located in the extra-heavy oil fields of the Orinoco Oil Belt in the eastern part of the country. Based on current oil prices, the gross monetary value of these reserves is estimated to be around $19.3 trillion.
The extra-heavy nature of the oil in the Orinoco Oil Belt complicates the production process both technically and financially. Producing this type of oil requires the use of diluents, specialized production techniques, and refinery investments. It is noted that 0.25 to 0.35 barrels of diluent are used per barrel of extra-heavy oil, resulting in an additional cost of $5 to $10 per barrel.
According to expert analyses, the technical production costs in the Orinoco Belt range from $12 to $18 per barrel, while the total cash breakeven point is between $35 and $45 per barrel. This cost structure causes Venezuelan oil to trade at a discount compared to Brent oil in international markets.
In addition to oil, Venezuela has significant potential in natural gas, with proven reserves estimated at 5.7 trillion cubic meters and a gross monetary value of approximately $800 billion. However, the annual natural gas production remains below 30 billion cubic meters, indicating that the gas resources have largely not been converted into economic value.
The long-term decline in oil production is noteworthy. Venezuela's daily oil production was 3.4 million barrels in 1998 and 2.6 million barrels in 2015, but it fell to around 400,000 barrels by 2020. Although there has been a recent trend of recovery, production is reported to be in the range of 850,000 to 900,000 barrels per day.
Experts indicate that insufficient investment, lack of maintenance, and infrastructure issues have contributed to this decline. To sustainably increase production, there is a need for new investments of $15 to $20 billion over the next 10 years, covering pipelines, storage facilities, and export terminals. If these investments are realized, an additional production increase of 500,000 barrels per day in the Orinoco Belt is anticipated.
According to scenarios dependent on oil prices, the payback period for investments of this scale ranges from 6 to 10 years, with shorter payback periods during times of higher prices and longer periods in a low-price environment.
Evaluations by international financial institutions indicate that the government's total share in oil projects generally ranges from 60 to 80 percent. In this context, it is estimated that approximately $3.8 to $7.7 trillion of Venezuela's gross oil value of $19.3 trillion could be converted into public revenue in the long term.
In a country with a population of about 28 million, these figures theoretically indicate an underground value of $714,000 per capita, while the economically realizable share remains in the range of $70,000 to $180,000.
On the other hand, the high carbon intensity of extra-heavy oil in the Orinoco Belt poses long-term risks. In global carbon pricing scenarios, this situation is assessed to potentially create an additional cost of $10 to $20 per barrel for Venezuelan oil.
Şenol Vatansever highlighted that the Venezuelan example illustrates the gap between underground wealth and economic prosperity. He stated that despite the theoretical potential of trillions of dollars, converting this potential into economic value requires high capital needs, long investment periods, technology, and a strong institutional framework. Vatansever noted that the data included in the news file was compiled through a comparative analysis of data from Reuters, the U.S. Energy Information Administration (EIA), the U.S. Geological Survey (USGS), Wood Mackenzie, OPEC, Argus Media, the IMF, and the World Bank by the Vatansever Platform and the Digital Biz editorial team.
Source: www.denizhaber.com
