If compared to America, Venezuela has five times more crude oil reserves.
US President Trump has completely considered Venezuela as his enemy. This has increased the tension between the two countries. Trump has given Venezuelan President Nicolas Maduro an ultimatum over phone to leave the country. Additionally, America has imposed restrictions on Venezuelan airspace and increased its activities in the maritime domain. Meanwhile, a big statement has come from President Nicolas Maduro that Venezuela does not want a slave-like peace.
Amidst all this, a big question arises that why is there so much poverty in Venezuela which has the world’s largest oil reserves? Let us try to find the answer to this question.
Venezuela’s oil reserves are so big
Venezuela’s relations with the United States have always been complex. America has been continuously alleging that Venezuela is responsible for the South American drug cartel. Due to this, Trump has announced a military operation against Venezuela. This is the same Venezuela, where the world’s largest proven oil reserves exist.
According to a report by Al Jazeera, by the year 2023, Venezuela had estimated oil reserves of 303 billion barrels (BBBL). Saudi Arabia is at second place in this list with 267.2 BBBL. After this comes Iran and Canada, which have reserves of 208.6 BBBL and 163.6 BBBL respectively. These four countries together account for more than half of the total global oil reserves.
Venezuela has the world’s largest oil reserves.
More than five times more oil than America
If compared with America, Venezuela has five times more crude oil reserves. America has reserves of about 55 billion barrels of oil. Due to this reserve, America comes ninth in the list of countries with proven oil reserves in the world.
Despite such large oil reserves, Venezuela is ranked among the poorest countries in the world. Venezuela does not earn even one-fifth of America’s oil income. This country is able to earn very little money from the export of crude oil.
Actually, Venezuela’s crude oil reserves are mainly located in the Orinoco Belt. This area is a very large area in the eastern part of Venezuela, spread over about 55 thousand square kilometers i.e. 21,235 square miles. Heavy crude oil is also found in this belt. This heavy crude oil is very viscous and very dense.
This heavy crude oil of Venezuela is very difficult and more expensive to extract than conventional oil. Apart from this, advanced technologies are required for the production of oil in this area, so that this oil can be made sellable. Due to this, the production of Venezuelan oil becomes expensive and due to the high cost, the profit on selling it is less. Apart from this, the density of Venezuelan crude oil is high and the amount of sulfur in it is also high. Therefore this oil gets lower price than the crude oils of other countries.
Despite large oil reserves, it ranks among the poorest countries in the world. Photo: Anton Petrus/Moment/Getty Images
Old infrastructure and under-exploitation
Venezuela’s oil production is dominated by its state-owned company Petroleos de Venezuela SA (PDVSA). This company oversees the production and management of most of the oil in the Orinoco Belt. The biggest problem is that this company has old infrastructure. Apart from this, it also does not have adequate investment arrangements. Also the government company is a victim of mismanagement. Venezuelan companies also have to face various types of international sanctions. Due to this, many problems arise in front of it. In such a situation, Venezuela is not able to fully exploit its largest oil reserves in the world. Due to this his income does not increase.
Venezuelan President Nicolas Maduro and US President Donald Trump.
Venezuela exports this much oil in total
According to the data of the Observatory of Economic Complexity (OEC), in the year 2023, Venezuela exported crude oil worth only $ 4.05 billion. Whereas, Saudi Arabia had exported $181 billion, America had exported $125 billion and Russia had exported $122 billion. Apart from this, Venezuela’s exports are much less than the exports made by other major exporters to other countries of the world. Venezuela is far behind in the export of not only crude oil but also petroleum products like gasoline and diesel. For this reason, despite having huge reserves of oil, Venezuela’s poverty cannot be eradicated.
That’s why poverty is not going away
Due to high inflation in Venezuela, the currency has devalued so much that it has become difficult for common people to buy even basic necessities. Then the economy of this country is completely dependent on oil, which Venezuela is not able to fully utilize. It is said that more than 95 percent of Venezuela’s economy is dependent on oil exports. Firstly, on top of the low prices, the economy here is immediately affected by fluctuations in international oil prices.
There has been a sharp decline in Venezuela’s gross domestic product. Also, the government has implemented price control there. Due to this, producers get less profit and they are discouraged from production. Venezuela has been a victim of political instability and corruption. Dominance in governance, efforts to crush opponents, unemployment and US sanctions are also important reasons for Venezuela’s poverty.
Also read: If you have the courage, show them why there is enmity between America and Venezuela? Trump’s threats against Maduro ineffective