The Future of Petroleum

The Future of Petroleum
With an unpredictable Middle East, Venezuela becomes a wise alternative

Alfredo Ascanio (askain)
Published 2008-11-01 14:47 (KST)

Edited by Carlos Arturo Serrano

The first oil concessionaries in the Middle East were not British, American, French or Dutch, but Armenian and Tartar. A hundred years ago, they drilled the great fields beneath the western shores of the Caspian Sea, and in bringing it to the surface turned the scrublands of Azerbaijan into a black desert, polluted the rivers and the sea, exploited and degraded their workers, and sowed the seeds of the Russian Revolution, according to British journalist Leonard Mosley.

Then in the 1870s the first steam drills were brought into the Caucasus, the same kind as those which were transforming the American oil industry and making John D. Rockefeller a multimillionaire. The Baku area turned into a place of tragic deaths and extravagant millionaires, like the tycoon Calouste Sarkis Gulbenkian.

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He became powerful in the oil business, and one of the richest men in the world. It was an era of monopoly and exploitation by a few ambitious men.

According to Dr. S. E. Subroto, the reserves of OPEC member countries are the largest in the world, nearly 84 percent of the total proved reserves of approximately 910 billion barrels. On the other hand, the World Energy Council has predicted that the world oil demand shall double before the year 2020.

Today there are evidently two major geographical areas with enough reserves to cover the demand of a world increasingly thirsty for energy, as long as proper investments are made to develop their productive potential. These two areas are the Persian Gulf and Venezuela.

In the Persian Gulf, Islamic fundamentalism has had profound consequences. Its religious leaders consider that Islam faces the serious threat of contamination by Western ideas. Sunnite and Shiite scholars, historic enemies, now agree that pro-Western rulers have taken the Muslim world to a state of apostasy and barbarism (jahiliyyah). Thus religion, nationalism, politics and petroleum constitute the most explosive mix in the world. To create a conflict of terrifying proportions, suffice it to combine these ingredients and shake slightly.

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During the past half century we have witnessed seven major crisis: World War II, the Suez Canal crisis, the Libyan crisis, the Arab oil embargo, the fall of the Iranian Shah, the Iran-Iraq war, and the Iraqi invasion of Kuwait. In view of the chaotic mosaic of uncertainties surrounding the Persian Gulf, Venezuela stands out as the most evident alternative capable of contributing to meet the growing energy demands of the US at least for the next 75 years, during which oil reserves can be replaced by other energy sources, such as solar and wind.

Let us review the possibilities open to Venezuela, as long as the country adopts coherent policies to take the fullest advantage of its oil reserves. Venezuela has conservatively estimated the amount of its "proved" reserves in around 65 billion barrels. These would theoretically last about 75 years, but efforts are primarily focused on the large petroleum fields known as the Orinoco Belt, estimated to contain over 1.3 trillion barrels of oil "in situ," and if this extra-heavy crude oil becomes economically exploitable, the proved reserves in these petroleum fields exceed 270 billion barrels.

In sum, the Venezuelan energy potential consists of the following: 65 billion barrels of proved oil reserves, 50 billion barrels of probable and possible reserves of light oil, 20 billion equivalent barrels of oil in proved natural gas reserves, and 270 billion barrels of proved extra-heavy oil in the Orinoco Belt.

So diplomatic negotiation between the US and Venezuela on the subject of petroleum is clearly a fundamental matter of policy. In this regard, the following is the testimony by General R. Knowles: the US international trade deficit attributable to imported petroleum was in excess of $35 billion in 1988, and estimates for the year 2000 surpass the $200 billion figure. According to him, "if we must increase our oil imports, it would seem prudent, insofar as possible, to do so from our neighbors of the Western hemisphere (Canada, Mexico and Venezuela)".

Alfredo Ascanio is a professor of economics at Simon Bolivar University in Caracas, Venezuela.