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RESEARCH REPORT
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VENEZUELA:
OPPORTUNITIES FOR
THE NON FAINT OFHEART INVESTOR
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RESEARCH NOTE
South America
9 November 2012
Energy Analytics
Institute (EAI)
15227 Oak Terrace Drive
Houston, Texas 77082
T. 1.832.387.0183
Venezuelan satellite
office contact:
58.416.403.8945
Follow us on Twitter
@EnergyAnalyInst
Investments
Opportunities
for the Non Faint
of Heart Investor
FORWARD TO RESEARCH REPORT
Venezuelas energy situation continues to attract the
attention of investors worldwide. The country is blessed
with an abundance of natural resources of which crude oil
and natural gas are of utmost interest to companies and
countries with large energy demands.
At the end of 2011, Venezuelas oil reserves amounted to
297,571 million barrels or MMbbls (of which 258,939
MMbbls were classified as heavy and extra-heavy oil and
located in Venezuelas Orinoco Heavy Oil Belt, also known
as the Faja), while its oil production amounted to 2,991
thousand barrels per day (Mb/d) which resulted in a
reserves-to-production or R/P ratio in excess of 100 years
(See Table 1).
Venezuela reigns as the largest holder worldwide of oil
reserves with control of 17.9% of said resources. The
country has even surpassed Saudi Arabia with its 265,400
MMbbls of oil reserves, which represent 16.1% of said oil
reserves worldwide.
However, Venezuelas oil production still lags behind that of
Saudi Arabia, which amounted to 11,161 Mb/d at the end
of 2011 (R/P ratio of 65.2 years), and other countries such
as Canada, China, Iran, Russia, the United Arab Emirates
(UAE), and the United States of America (USA).
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At the end of 2011, Venezuelas gas reserves amounted to 195.0 trillion cubic feet (Tcf), while its gas
production amounted to 7,125 million cubic feet per day (MMcf/d) gross (4,241 MMcf/d, net after
reinjections) which resulted in a R/P ratio in excess of 100 years (See Table 2).
As such, Venezuela is the eighth largest holder worldwide of gas reserves with control of just 2.7% of
said resources.
TABLE 1: WORLDWIDE OIL RESERVES AT THE END OF 2011 (TOP 10 COUNTRIES)
Country Rank
Reserves
(MMbbls)
Share of
Total (%)
Production
(Mb/d)
R/P Ratio
(In Years)
Venezuela (1) 1 297,571 17.9% 2,991 100 +
Saudi Arabia 2 265,400 16.1% 11,161 65.2
Canada 3 175,200 10.6% 3,522 100 +
Iran 4 151,200 9.1% 4,321 95.8
Iraq 5 143,100 8.7% 2,798 100 +
Kuwait 6 101,500 6.1% 2,865 97.0
United Arab Emirates 7 97,800 5.9% 3,322 80.7
Russia Federation 8 88,200 5.3% 10,280 23.5
Libya 9 47,100 2.9% 479 100 +
Nigeria 10 37,200 2.3% 2,457 41.5
Note: (1) Reserve and production data provided by PDVSA
Source: BPs Statistical Review of Energy
TABLE 2: WORLDWIDE GAS RESERVES AT THE END OF 2011 (TOP 10 COUNTRIES)
Country Rank
Reserves
(Tcf)
Share of
Total (%)
Production
(MMcf/d)
R/P Ratio
(In Years)
Russian Federation 1 1,575.0 21.4% 58,730 73.5
Iran 2 1,168.6 15.9% 14,687 100 +
Qatar 3 884.5 12.0% 14,208 100 +
Turkmenistan 4 858.8 11.7% 5,761 100 +
USA 5 299.8 4.1% 63,014 13.0
Saudi Arabia 6 287.8 3.9% 9,601 82.1
United Arab Emirates 7 215.1 2.9% 5,005 100 +
Venezuela (1) 8 195.0 2.7% 7,125 100 +Nigeria 9 180.5 2.5% 3,856 100 +
Algeria 10 159.1 2.2% 7,546 57.7
Note: (1) Reserve and production data provided by PDVSA
Source: BPs Statistical Review of Energy
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However, Venezuelas gas production, according to BP at the end of 2011, ranks twenty-sixth
worldwide and lags behind that of the following countries: Algeria, Argentina, Australia, Canada, China,
Egypt, India, Indonesia, Iran, Malaysia, Mexico, Netherlands, Nigeria, Norway, Pakistan, Qatar, Russian
Federation, Saudi Arabia, Thailand, Trinidad & Tobago, Turkmenistan, United Arab Emirates, United
Kingdom (UK), USA, and Uzbekistan.
In a move to increase its proven oil and gas reserves and production capacity, Venezuelas state oilcompany Petrleos de Venezuela (PDVSA) has announced a seven-year capital budget plan for 2012-
2018 (See Tables 6-1 and 6-2) that calls for investments of $266,059 million (an average of $38,008
million per year) with the lions share being destined for the following activities: production ($127,941
million), new refineries and upgraders ($59,490 million), onshore gas developments ($25,425 million),
existing refineries ($18,999 million) and exploration ($5,970 million). Given the magnitude of PDVSAs
capital budget, the company is counting heavily on third party investments from international oil
companies (IOCs) as well as national oil companies (NOCs).
In short, Venezuela holds wide spread potential for investors searching for activities in the upstream,
downstream, and midstream sectors, among others indirectly related to the petroleum sector.
Nevertheless, Venezuelas petroleum sector has been undergoing across the board changes and
expropriations since 2005. These changes have forced a number of companies to exit the country do to
disagreement with the governments Sowing Petroleum Plan and policies, which continuously point
the blame at IOCs for a number of issues currently affecting Venezuelas petroleum sector and the
country in general.
While Energy Analytics Institute is not in complete agreement with the current governments
petroleum sector policies, or entirely confident in its means to increase its proven oil and gas reserves
and production, we cannot overlook the enormous opportunities that are found in Venezuela. This
Investor Research Report takes a look at these opportunities within the framework of PDVSAs seven-
year capital budget plan. It also examines the evolution of PDVSAs Balance Sheets and Income
Statements over the last six years.
FOR MORE DETAILS, DOWNLOAD THE FULL 59-PAGE RESEARCH REPORT VENEZUELA: OPPORTUNITIES
FOR THE NON FAINT OF HEART INVESTOR ONLINE.
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INVESTOR RESEARCH REPORT FORWARD ENDS
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DISCLAIMER / DISCLOSURES
The Energy Analytics Institute (EAI) is an independent research company and is not a registered
investment advisor. Information contained in this report is based on sources considered to be reliable
but is not represented to be complete and its accuracy is not guaranteed. Opinions expressed reflect
judgment of the author as of the date of publication and are subject to change without notice.
This document and its contents do not constitute an offer, invitation or solicitation to purchase or
subscribe to any securities or other instruments, or to undertake or divest investments. Neither shall
this document or its contents form basis of any contract, commitment or decision of any kind. This
material has no regard to specific investment objectives, financial situation or particular needs of any
recipient. It is published solely for informational purposes and is not to be construed as a solicitation or
an offer to buy or sell any securities or related financial instruments.
Energy Analytics Institute (EAI) accepts no liability of any type for any direct or indirect losses arising
from use of this document or its contents. All information is correct at time of publication; additional
information may be made available upon request.
Energy Analytics Institute (EAI) and its officers, directors, shareholders and employees, and members of
their families may have positions in securities mentioned in this report and may as principal or agent,
buy and sell such securities before, after or concurrently with publication of this report.
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EXECUTIVE TEAM
Editor:
Chad Archey
Copy Editor:
Layla Benitez-James
Editorial Council:
James Lam
Earl Francisco Lopez
Ofelia Paredes
Vinod Sreeharsha
Harold Stewart
Commentaries / Analysis:
Ian Silverman
Aaron Simonsky
Jeremy MorganJared Yamin
Distribution:
Fidencio Casillas
Proofreading:
Rufus Trotman
Carlene Williams
Photography / Layout:
FOTObicion
Director General:
P. Don Pitts
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The fees for special ad hoc research reports can be obtained by contacting us directly at the following
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Energy Analytics Institute
15227 Oak Terrace Drive
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W.www.energy-analytics-institute.org
Follow @EnergyAnalyInst
In Venezuela (Representative Office):
Energy Analytics Institute (formerly Editores Latin Petroleum, C.A.)
Avenida Francisco de Miranda
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Municipio Chacao
Caracas, Venezuela
T. 58.416.403.8945
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