Venezuela's oil reserves expand

New BP report ranks it as number two behind Saudi Arabia

Venezuela is now the world's second-biggest holder of proved oil reserves, overtaking the Gulf producers Iran, Iraq and Kuwait. In the 2010 edition of its benchmark Statistical Review of World Energy, which was published last week, BP has made substantial upwards revisions to its estimates of Venezuela's oil reserves for both last year and 2008.

It appears to have included in its latest tally about 73 billion barrels of heavy crude reserves for which the South American country has long sought recognition from OPEC. That boosted the company's estimate of Venezuelan reserves by over 73 per cent, following a smaller revision last year. According to BP, the Middle East's share of global oil reserves has shrunk by almost 10 percentage points in the past two decades, as producers in South America, Eurasia and Africa have established more commercially viable deposits of the world's leading fuel. Those countries now officially include Venezuela.

BP has set at 56.6 per cent its estimate of the proportion of the world's proved oil reserves that are located in the Middle East. Still, the Middle Eastern reserves have increased by 14 per cent in the past 20 years to 754 billion barrels, according to BP. Over the same period, however, the world's total proved oil reserves have expanded more than twice as fast, swelling by nearly a third to 1.33 trillion barrels by the end of last year from 1 trillion barrels.

The world's top six holders of oil reserves, the latest BP league table says are, in descending order: Saudi Arabia, Venezuela, Iran, Iraq, Kuwait and the UAE, all of which are OPEC members. Russia was last year's top oil producer, pumping more than 10 million barrels per day (bpd), followed by Saudi Arabia and the US. Russia and Saudi were also the leading oil exporters. The US is a net importer of oil.

The review ranked the UAE as the eighth most prolific oil producer last year. Its output, averaging 2.6 million bpd, narrowly exceeded those of Iraq and Kuwait, at 2.48 million bpd. Venezuela's oil output averaged 2.44 million bpd,. As OPEC's biggest western hemisphere oil producer and a founding member of the group, Venezuela has been pushing for a higher OPEC production quota based on recognition of its large reserves of "unconventional" heavy crude.

Venezuela can still develop those deposits while honouring its commitment to OPEC because the group's production quotas exclude unconventional oil. Formal recognition of the reserves and a higher quota, however, would give the country more flexibility to raise its output of lighter crude, which is usually more profitable. US oil output rebounded last year by 7 per cent to 7.12 million bpd. The 462,000 bpd increase was "by far" the world's biggest and came mainly from the Gulf of Mexico, said Tony Hayward, the chief executive of BP. The Middle East remained the world's top oil producing region last year, accounting for more than 34 per cent of the global total. It was followed by Europe/Eurasia and North America.