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9/16/08

A bit more about those Venezuelan oil reserves

The announcement today from Venezuela that the country now has 142.3 billion barrels of oil in proven reserves really is quite significant, and here's why:


For a start, "proven reserves" is a strictly defined term in the world of oil. It means that there is at least a 90% probability that the crude oil underground can be recovered economically (i.e. at a profit). These are the only reserves that are allowed to be counted as assets by the big international oil companies when they make their financial reports, and differ significantly from "probable reserves" which are a 50% chance of being economic and "possible reserves" which can be as low as a 10% chance of being recovered at a profit to the company.

Therefore Venezuela can now say they're sitting on 142.3 billion barrels of profit (and there's likely more to come). But how long are these reserves likely to last? Well at the moment there is debate as to the real production figures for the country; detractors say there is as little as 2.5 million barrels pumped per day (Mbbl/d), while PdVSA claims up to 3.5Mbbl/d. What's certain is that production is set to rise, so let's imagine that Venezuela pumps a steady 4Mbbl/d. This means, using the quick'n'dirty math:

4m per day X 365 days = 1.46Billion bbl/year
142.3/1.46Bn = 97.46

And yes, that 97.46 number is exactly what you think it is. It means Venezuela has proven (repeat proven) reserves that will last over ninety-seven years at a production rate significantly higher than that of today.

But the USA's interest in Venezuela is all about freedom and democracy, ya knowz. It's not about oil. Oh no no no no no no no no no..........