Venezuela Has the Most Oil in the World, but It Is Hard to Sell
Its benchmark crude is thick, sulfurous, and laced with metals, so buyers demand a steep discount and only specially equipped refineries can process it.
Economics Explained · Where Has Venezuela's Oil Gone?Venezuela holds more proved oil on paper than any other country, about 303 billion barrels by OPEC's count. Outside analysts place the retrievable total near 100 billion barrels, since much of the oil is extremely heavy, buried deep, and expensive to pump. Even that lower total would rank it among the best endowed nations on the planet, yet when output was highest, in the late 1990s, Venezuela pumped only about 3.5 million barrels per day.
The reason is what that oil is like. The benchmark grade, called Merey 16, scores about 16 on a measure called API gravity, in which lower numbers mean thicker and heavier crude. It is the opposite of the light, easy flowing oil that refiners prefer, and it takes more energy, equipment, and processing to turn into gasoline, diesel, and other fuels.
It is also dirty. Merey 16 contains roughly 2.5 to 3.4 percent sulfur, which makes it what the industry calls sour, plus high concentrations of metals including vanadium and nickel. Sulfur must be removed to meet fuel standards, and metals can foul equipment and catalysts, so buyers treat the crude as lower quality from the start.
That quality gap shows up directly in price. Under normal conditions, Venezuelan crude trades about $6 per barrel below Brent crude, the light North Sea oil that serves as a global benchmark, and the gap has sometimes stretched beyond $20 per barrel when sanctions add risk. Actual revenue is therefore almost certainly lower than headline sales figures suggest, because nobody pays full price for this crude.
Only certain buyers are set up to take it. Beginning in the 1990s, refiners on the United States Gulf Coast spent billions building coker units and other deep conversion equipment made to handle thick, sulfur laden oil from Venezuela, Mexico, and Ecuador. Valero Energy alone reports capacity to process 300,000 daily barrels of Venezuelan oil using its current equipment, which is why having the most oil does not mean having the most valuable oil.
Questions people ask
What is Brent crude?
Brent is a light, low sulfur crude pumped from the North Sea that is used as a global reference price. Buyers and sellers compare other grades to it, with better oils priced near Brent and harder to refine oils priced below it.
What does sour oil mean?
Sour means the oil contains a relatively high amount of sulfur. That sulfur must be stripped out during refining to make clean fuels, which adds cost and equipment, so sour barrels are worth less than sweet, low sulfur barrels.
What does a coker unit do?
A coker unit heats the heaviest leftover oil to very high temperatures until it cracks into lighter fuels and a solid called petroleum coke. It lets a refinery squeeze gasoline and diesel from thick barrels that simpler refineries cannot use.