OPEC States that Venezuela has World’s Largest Oil Reserves

Venezuela could boost its long stagnant oil output considerably in just five to seven years if it offers investors greater certainty over contracts, an executive of Russia’s LUKOIL said. Under president Hugo Chavez, who died on Tuesday after 14 years in power, foreign oil companies in Venezuela, the world’s 11th largest crude exporter, have faced price controls and currency devaluations along with threats of nationalisation.

Brent crude prices didn’t move much as traders absorbed the death of Hugo Chavez who ruled the world’s sixth largest OPEC producer. Venezuela is home to the world’s largest proven oil reserves of around 296.5 billion barrels, but its production has steadily fallen under Mr. Chavez who diverted Venezuela’s oil revenues to his pet projects and weakened the state-owned Petróleos de Venezuela, which is responsible for developing the country’s enormous riches.

Iraq is sharpening a push to sell its swelling crude output and sit at oil’s top table with Saudi Arabia, sweetening terms for contract buyers next year, its customers say. Iraqi Oil Minister Abdul-Kareem Luaibi held court to oil executives in Vienna’s Hotel Imperial last week on the sidelines of an OPEC meeting. Some buyers have said they were concerned by higher prices and variable quality.

CARACAS — Nicolas Maduro’s win in Venezuela’s presidential election means state oil company PDVSA will continue funding the government’s socialist policies while increasingly relying on deals with China and Russia. The late Hugo Chavez picked Maduro, a 50-year-old former bus driver, to continue his self-declared revolution in the OPEC country where he nationalized most of the oil industry during his polarizing 14-year rule.

Rosneft reported one of the largest rises in crude output among the Russian oil majors last year More crude from state-owned top producer Rosneft kept Russian oil output the highest in the world last year, ahead of Saudi Arabia, Energy Ministry data showed on Wednesday. Crude output edged up almost 1% to a new post-Soviet high of 10.37 million barrels per day (bpd), but the increase could halt this year due to depleted oil fields in West Siberia.

Saudi Arabia is currently the world’s leading oil producer, containing approximately one-fifth of the world's proven oil reserves. According to the U.S. Energy Information Agency, Saudi Aramco reported that it had reached its target production capacity of 12 million barrels per day (bpd), even as Reuters reports that Saudi production is just under 10 million bpd. Whatever the actual figures, Saudi Arabia nevertheless produces roughly one-third of the Organization of Petroleum Exporting Countries (OPEC) total output of roughly 30 million bpd. 

OPEC’s likely decision to leave quotas unchanged next week belies the growing prospect of having to make the deepest oil-production cuts since 2009 as a global supply surge threatens to weaken prices. The Organization of Petroleum Exporting Countries may need to lower output by 1 million barrels a day, or 3%, in the first half of next year, according to Societe Generale SA. Brent crude may drop 20% by June if the group doesn’t reduce the amount it pumps, the Centre for Global Energy Studies said.

In Monday's WSJ, Guy Chazan explains why energy companies are shifting their focus away from the Middle East and toward the West, and how this will have profound implications for the companies, global politics and consumers, here's an excerpt: