From the Editors of VenEconomy
Not so long ago, analysts agreed that world oil production would inevitable enter a contraction stage within 30-40 years, due to the depletion of oil fields.
To Venezuela, an oil producer with one of the biggest reserves on the planet, that meant it had secured sales of all the oil it produced during all the 20th century, and at higher prices every time.
This consensus overlooked the new technologies that would help exploit mega-deposits of natural gas and shale oil around the world, and much less the implications this would have to the Venezuelan oil outlook.
What changes here for Venezuela? Well, an entrance in the markets of high volumes of non-conventional crude oil from all over the world, mainly from the three countries with the highest reserves in shale oil that may pose a threat to Venezuelan oil.
First of all, it is estimated that the U.S., the biggest consumer of Venezuelan oil thus far, will become self-sufficient as to oil and gas in less than 20 years.
Second of all, Russia and China, first and third country, respectively, have the biggest reserves with a joint estimate of more than 100 billion barrels in technically recoverable reserves, what could make China, eventually, self-sufficient as well. In addition, Russia recently inked a $270 billion mega-deal with China National Petroleum Corporation (CNPC) for conventional oil. This means that even China, a broader market for Venezuelan oil where the governments of Hugo Chávez and Nicolás Maduro laid eyes on, would be at stake as well.
The situation for Venezuela gets worse after Chávez sold its refineries to other countries, one of the most important defenses for the nation to prevent eventual market losses for its crude oil. These refineries, many of them in Germany, the U.S. and other countries, guaranteed a captive market of up to 900,000 barrels per day. Another big mistake in Chávez’s oil policy was that of having suspended the production and sales of Orimulsion, a product that competes with coal (not crude oil) as an energy source.
Venezuela has to keep its own house in order after this alert. If Venezuelan oil is heading towards an uncertain future, the nation would have to develop its potential in other areas such as tourism, agriculture, manufacturing and the production of services, but… the Venezuelan communist project has already flunked all these subjects.VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.
Click here to read this in Spanish