Friday, August 11, 2006

CARACAS, Venezuela (Bloomberg): Venezuela's oil reserves may almost triple in two years as oil companies develop the country's Faja, or heavy-oil belt, President Hugo Chavez said.

Proven reserves may rise to 171 billion barrels by November 2007 from the current 81 billion, Chavez said during a TV broadcast from the Faja in the eastern state of Anzoategui.

Further drilling as part of a certification process may increase reserves to 235.6 billion barrels by 2008, Chavez said.

"We are building a new history," Chavez said. "We will be in second place as regards reserves by the end of next year."

Chavez said Venezuela might supplant Saudi Arabia by 2008 as the country with the world's largest oil reserves.

London-based BP Plc, in a June review of energy statistics, pegged Saudi Arabia's reserves at 264.2 billion barrels.

Venezuela's heavy-oil deposits may rival Canada's tar sands as an alternative source of oil to meet growing world fuel demand. Rising oil prices are making development of the Faja and tar sands more feasible economically.

Venezuela's heavy oil is high in sulfur, coke and metals and needs more refining than conventional oil.

State oil company Petroleos de Venezuela SA began a geological survey of the Faja last year with partners including Repsol YPF SA and Petroleo Brasileiro SA. The region has been divided into 27 blocks, some of which already are being drilled to certify their reserves.

The certification process, which includes third-party verification, will take up to two years, Petroleos de Venezuela board member Eulogio del Pino said in a June interview. Up to 100 wells will be drilled this year in a $100 million investment, del Pino said.

Petroleos de Venezuela has four joint ventures with foreign producers to pump crude oil from the Orinoco Belt to the Caribbean coast for export to refineries in the U.S. and other countries. The four produce about 600,000 barrels a day.

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