Latin America holds one fifth of world’s oil

Venezuela’s reserves rise to 297 billion barrels with heavy oil in the Orinoco Belt and Brazil’s capacity is growing.

Brazil oil exploration [GALLO/GETTY]
Venezuela’s government, led by president Hugo Chavez, may control 85 per cent of Latin America’s crude reserves[GALLO/GETTY]

Fossil fuels are an energy source condemned by environmentalists, but do not appear to be on the way out in Latin America and the Caribbean, given the rise in the region’s proven oil reserves in recent years.

Known reserves in the region make up 20 per cent of the global underground oil reserves of nearly 1.7 trillion barrels. Venezuela says it leads the world as the country with the greatest oil reserves after certifying 297 billion barrels, thanks to the heavy crude in the Orinoco Belt.

In 2009, confirmed discoveries increased by 20 per cent worldwide, while the increase in Latin America and the Caribbean was 40 per cent.

Venezuela possesses 85 per cent of the region’s crude reserves, and Latin America has the second largest oil reserves in the world after the Middle East, which has 55 per cent of the global total, according to figures presented by the Latin American Energy Organisation (OLADE) at a two-day seminar that ended Wednesday in Quito.

Information presented at the First Latin American and Caribbean Seminar on Oil and Gas, organised by OLADE in cooperation with Ecuador’s Non-Renewable Natural Resources Ministry, indicated the region has at least 345 billion barrels of oil available for extraction.

“I’m not sure whether we have 85 per cent, but the increase in our proven reserves means our country will continue to be one of the four or five top global players in the oil and gas market for many decades to come,” said Nelson Martínez, head of PDVSA America, a division of the Venezuelan state oil company.

Regional players

Brazil recently made large undersea oil discoveries in the waters off its Atlantic coast, like the Tupí oilfield in 2007 with possible reserves of 33 billion barrels, and the Jupiter oilfield in 2008, with 12 billion barrels, raising the country’s share to five per cent of Latin America’s reserves.

Third in the regional ranking is Mexico, which in spite of seeing its proved reserves decline over the last 15 years, nevertheless possesses four per cent of the region’s reserves thanks to quantifying over 137 billion barrels of crude underground in the Paleocanal Chicontepec oilfield, in 2009.

Ecuador is next, with three per cent of the region’s proved crude reserves. Its reserves grew 63 per cent in 2008 compared with 2007 figures, partly because of certification of the ITT oilfield complex which has reserves of 960 million barrels.

The heavy crude in this group of oilfields, located in and around a national park in the Amazon jungle, appears to be edging ever closer to extraction, in spite of the Yasuní-ITT initiative aimed at leaving the oil underground in exchange for an international financial contribution.

The rest of the countries in the region presently hold the remaining three per cent of oil reserves, but they are constantly seeking new deposits.

Argentina, for example, launched an Exploratory and Productive Development Programme for 2010-2014, run by the Spanish-Argentine company Repsol YPF.

The programme aims to determine potential underground reserves nationwide, and to replace oil as an energy source, geologist Ramón Martínez, adviser to the Argentine Energy Secretariat, said.

According to OLADE, in 2009 Argentina had oil reserves that – without additional discoveries – would last for 11 years, Brazil for 18 years, Colombia for eight, Ecuador for 34, Mexico for 11 and Venezuela for 201. Uruguay is also prospecting for oil both underground and in its exclusive economic zone in the Atlantic, with encouraging early reports.

Mexico has committed to investing more than $27bn by 2019, in order to develop its potential deepwater and underground reserves.

This will require renewing its drilling equipment, as 80 per cent of its 126 drills are between 37 and 52 years old, said Gustavo Hernández García, subdirector of planning and evaluation for the Mexican state oil firm PEMEX.

Meanwhile, the Brazilian state oil company Petrobras is planning investments of the order of $73bn up to 2015, in conjunction with its partners, in the ocean platform of the Santos basin off southeast Brazil.

Venezuela’s “Magna Reserva” project, carried out since June 2005 to certify crude reserves in the Orinoco Heavy Oil Belt, increased previous proven reserves in that area of central Venezuela 34-fold.

New capacity

The plans for the Orinoco Heavy Oil Belt, which are “at the stage of visualisation and dividing into sectors,” were presented by PDVSA’s Nelson Martínez at the Quito seminar.

Developing the Orinoco belt will involve drilling 10,500 wells, building two refineries, constructing a new coastal export terminal and upgrading another.

Venezuela has invited every country in Latin America and the Caribbean, as well as private transnational corporations, to participate in the exploitation of these new oilfields.

By 2015, “Venezuelan oil output will be 4.5 million barrels per day (bpd), so long as that does not harm the worldwide structure of production and prices, and it will be refining 3.6 million bpd,” Martínez said.

The official emphasised the change in his country’s geopolitical model, which has led it to invest for the first time in oil exploration, production and refining in other countries of South America. It has also just acquired 60 per cent of a transport company “which owns 300 barges” on the Paraná river that flows through Brazil, Paraguay and Argentina.

“The geopolitical goals are to establish new partnerships, enter new markets and strengthen the Organisation of the Petroleum Exporting Countries (OPEC),” he said.

Meanwhile, PDVSA is reducing its investments in refineries in Europe. “It didn’t make any sense to own refineries in Gelsenkirchen and Karlsruhe, in Germany, to which we had to provide 250,000 bpd in oil swap operations with Russia,” Martínez told IPS in an interview.

“Since they were using Russian oil, it made better sense to sell the refineries to a Russian company, as we have just done,” he said.

As well as producing oil in association with Petroecuador and gas with the Bolivian state company, and carrying out exploration in Argentina and Uruguay, PDVSA is also involved in two large refinery construction projects in South America: Manabí, in Ecuador, which will process 300,000 bpd, and Pernambuco in Brazil, with a capacity of 230,000 bpd.

“We have already formed the Eloy Alfaro Pacific Refinery mixed company with Petroecuador, and we are keeping to the agreed scheme,” said Martínez, who denied the project is behind schedule.

He said once the basic engineering is completed in October, terms of reference can be drawn up to approach financing sources for the $12bn that will be needed for construction.

Analysis of the activities of the state and private companies at the seminar allowed engineer Benito Cabrera, Petroecuador’s assistant manager of operations, to conclude that Latin America and the Caribbean will be producing 12 million bpd of oil in 2015, compared with 9.6 million bpd in 2009, of which 3.3 million bpd were exported.

Oil production in the region is very uneven, with Venezuela, Mexico and Brazil jointly responsible for 80 per cent. A second group of countries, Colombia, Argentina and Ecuador, produce 17 per cent of the regional total, while the other countries between them produce three per cent.

A version of this article first appeared on Inter Press Service news agency.

Source: IPS