The development process of human society cannot be separated from energy, human energy era with the improvement of productivity level, from the wood era, the coal era to the current “oil era”, although there are many new energy hope to replace oil, but oil is still the world’s most important energy and resources, known as the “blood of industry”. OPEC and its oil-producing Allies have just reached an agreement to cut global oil production by 9.7 million barrels a day, starting May 1, in the hope of boosting prices, which have recently fallen to around $20 due to global economic disruptions.

Oil extraction in Lake Maracaibo, Venezuela

At present, the top five countries in the world in terms of proven oil reserves are Venezuela, Saudi Arabia, Canada, Iran and Iraq, of which Venezuela’s total oil reserves account for 18% of the world’s total oil reserves, Saudi Arabia accounts for about 16%, and Canada accounts for about 10%. However, Venezuela, which has the largest oil reserves, was not heard much at the meeting, and Saudi Arabia, which is located in the Middle East region of Asia, is leading the meeting. Why?

Here we should understand that the amount of oil reserves is only one aspect, and the right to speak in the international market mainly depends on a country’s oil exports. If we look at oil exports from the perspective of oil exports, Saudi Arabia is the world’s largest oil export country, and the average daily oil exports of Saudi Arabia in 2019 are about 8.33 million barrels. In second to fourth place are Russia (5.3 million b/d), Iraq (4 million b/d), Canada (3.3 million b/d) and the United States (3 million b/d). In the international oil market, the oil exports of Venezuela, the first reserve, are not top, in 2018, Venezuela’s average daily oil exports of about 1.245 million barrels per day, the lowest in 28 years, to 2019 exports continue to decline, the average daily export should be less than 1 million barrels.

Why does Venezuela, which has the world’s largest oil reserves, export so little? The important reason is that Venezuela’s oil burial conditions are poor, the oil is mainly distributed in the northwest of the Maracaibo Lake, the high cost of exploitation, the cost of each barrel of oil is about 25 US dollars, the cost is much higher than the Gulf coast countries, like Saudi Arabia, the cost of oil extraction is less than 10 US dollars. Therefore, when the international price of oil is low, Venezuela’s oil production and exports will be greatly reduced, because you have to pump more thanks to money. In addition, in terms of oil quality, Saudi Arabia’s oil is of better quality. Therefore, although Venezuela has the largest oil reserves in the world, due to the high cost of exploitation and poor quality of oil, it has a small export volume in the international oil market, ranking 10 outside, and its influence is relatively weak.

Lake Maracaibo

Article from M&J International Trading Co., Ltd