Last Updated: Tue Jul 19, 2011 18:52 pm (KSA) 15:52 pm (GMT)

Eman El-Shenawi: Market Moves / Hello, Venezuela, possessor of biggest oil reserves. Welcome to the oil games

Eman El-Shenawi

Over the past year, many will have thought of Saudi Arabia, the oil goliath, as being home to the largest proven crude oil reserves in the world and that the country will maintain this title for many years to come. After all, the kingdom is the largest oil exporter in the world.

But creeping up behind Saudi throughout 2010 was the South American oil bigwig, Venezuela.

“Venezuela’s crude oil proven reserves surpassed those of Saudi Arabia in 2010,” is what the Organization of Petroleum Exporting Countries cartel said in its annual statistical bulletin. But because the rise happened through the past year, and analysts have been honing in on Saudi as the main oil superpower for a while now, many should now be looking at Venezuela a little differently.

Venezuela’s proven crude oil reserves reached 296.5 billion barrels in 2010, up 40 percent on the year and higher than Saudi Arabia’s 264.5 billion barrels.

Much like the geek that turns chic and suddenly gets all the girls, Venezuelan oil power would go beyond making more money from possible increases in production or exports. Its geopolitical strength would too get a makeover.

I am not suggesting an “awakening of the beast” scenario, as there are still doubts over whether Venezuela’s heavy oil discoveries are actually economically viable, I simply propose that things could get better for the South American player.

Think back to the oil price row last month at that acrimonious OPEC meeting. Yes, the one that was the “worst in history,” when Venezuela, Iran and Iraq were part of a group that refused to endorse a Saudi-led push to hike output to curb global inflation.

Now this clan, repeatedly described as “price hawks” by the media, could be even more empowered in their fight against higher prices, which is supported not only by Venezuela’s oil luck, but increases in proven reserves in both Iran and Iraq also.

They were never the little people, as such. Venezuela still held the largest oil reserves of any OPEC country outside the oil-abundant Middle East. But Saudi is still king with its “world largest exporter” title, exporting 6.2 million barrels a day.

But the Venezuelan oil surge leaves me wondering how long the Saudi title will last now that other players are entering the mix, making competition fiercer and OPEC meetings a lot less dull.

Alas, let me tell you that Venezuela’s boosted proven reserves remain difficult and expensive to extract. And so, how soon will Venezuela’s oil presence be felt? Will it ever be influential in superpower decisions? And will its potential oil stealth ever threaten OPEC’s goliath, Saudi Arabia?

Well, will it? The next OPEC meeting should be interesting. The newly-strengthened Price Hawks versus Goliath and Crew (the Gulf Arabs), part II. Let the games begin.

(Eman El-Shenawi, a Columnist at Al Arabiya English, can be reached at: eman.elshenawi@mbc.net.)

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