Why is Venezuela so poor? Venezuela’s reserves are heavy/sour crude. While some countries, like India, have recently built a refinery that can process it, most of the world’s refineries are set up to refine light sweet crude. Light sweet crude yields more final product than heavy/sour crude. It’s simple economics, Venezuela’s oil has an extremely low demand.
When evaluating a region’s oil potential, oil reserves are only one aspect to consider. The quality of the oil, including factors like density and sulfur content, and its ease of extraction are equally important. These qualities impact the total production cost across both upstream (exploration and extraction) and downstream (refining and distribution) processes.
High-quality, accessible oil is typically cheaper to produce and refine, enhancing commercial viability. In contrast, lower-grade, challenging-to-extract oil demands advanced technology and higher investment, leading to increased production costs.
