The same is a major oil producer, why Saudi Arabia is rich in oil, but Venezuela is on the verge of bankruptcy
Petroleum is the ancient organic matter through a long period of compression and heating after the gradual formation, the formation of oil takes at least millions of years, oil is a non-renewable resources. Oil, as the world's most important resource, has maintained the functioning of social life, economic development and even political stability and national security like blood.
The role of oil is everywhere, the development of every country in the world is inseparable from oil, and every country tries its best to obtain oil resources.
Depending on the location of the world, the oil on the territory of each country is different. The country with the highest proven oil reserves in the world to date is Venezuela with 303.8 billion barrels. It is followed by Saudi Arabia with 297.6 billion barrels.
Owning oil is equivalent to owning wealth, which is the main oil producing country, and it earns a lot of money by exporting oil, such as Saudi Arabia, Kuwait, and the United Arab Emirates are all famous local tycoon countries in the world. But why is Venezuela, the world's largest oil reserve, on the verge of bankruptcy?
Saudi Arabia's oil exports totaled $136.2 billion in 2021, ranking first in the world. Saudi Arabia's oil exports are worth $15.4 billion, ranking 11th in the world.
Saudi Arabia is located in the Arabian Peninsula in southwest Asia, bordering the Persian Gulf to the east and the Red Sea to the west, bordering Jordan, Iraq, Kuwait, the United Arab Emirates, Oman, Yemen, Bahrain, Qatar and other countries. The land area is 2.25 million square kilometers, and the entire land is almost desert, without a single river. Saudi Arabia has a total population of 34.81 million by 2021, a total GDP of $833.5 billion in 2021, and a GDP per capita of $23,500.
Venezuela is a country located in the north of South America, the capital of Caracas. It is bordered by the Caribbean Sea to the north, Colombia to the west, Brazil to the south, and Guyana to the east. Venezuela covers an area of 91.64 km². There are many rivers, lakes, waterfalls in Venezuela, suitable for the growth of various animals and plants. Venezuela has a total population of 32.22 million by 2021, with a total GDP of US$46.5 billion and a PER capita GDP of US$1686.
When Saudi Arabia was founded in 1932, it was still poor and white, the land was almost desert, there was a serious lack of water resources, and the world powers and even neighboring countries could not look up to Saudi Arabia at that time. During the First World War, the demand for oil continued to increase around the world, and countries stepped up their efforts to find oil. The United States Mobil Oil Company sent a Togolese exploration team to saudi Arabia to find oil, invested a lot of manpower, material and financial resources, after ten years of efforts, in 1938 in Saudi Arabia's Dammam dug the first oil well, since then Saudi Arabia's oil in full burst, but also with oil on the country's peak road, leapt to become the richest, most local country. At that time, saudi Arabian National Oil Company (Saudi Aramco) was responsible for the entire Saudi Arabian oil exploration, development, production, refining, transportation and sales business. Oil cooperation has made the relationship between the United States and Saudi Arabia closer, the United States has obtained rich oil resources, and Saudi Arabia has gained wealth.
At first, Saudi Arabia could only share a small portion of the proceeds from the company, and most of the proceeds were split away by large companies such as Exxon Oil and Mobil in the United States. But the oil for the nation's survival is in the hands of the Americans, which has led the Saudi government to regain control of oil from the United States. Saudi Arabia is not forcibly seizing control of oil directly from the United States. The Saudis have chosen to nationalize Aramco through "asset-competitive acquisitions."
In 1972, through several negotiations with the holding company, Aramco's board of directors agreed to sell 25% of its stake to the Saudi government. Two years later, the Saudi government once again acquired a 35% stake in Aramco, and by this time the Saudi government already owned 60% of the shares, becoming Aramco's largest shareholder. After another two years, the Saudi government negotiated the remaining 40 percent of the shares, and Aramco nationalized in three redemptions. Saudi Arabia has adopted a more moderate approach, spending 22 years gradually taking control of its oil from the United States. It can not only obtain technology and a complete oil industry chain, but also maintain relations with the United States, and the support of the United States has enabled Saudi Arabia to develop rapidly in the Middle East. Today we see the Saudi royal family buying and buying like crazy all over the world, spending money like dirt. Mainly because of the huge benefits of oil sales.
Like Saudi Arabia, Venezuela's original oil extraction system relied on European and American oil companies. They leased the land to oil companies in Europe and the United States, collecting their own rent and dividends. As a result, a large amount of oil profits are taken away by foreign companies. Venezuela wants to regain control of oil, and since the 1970s, it has stipulated that new oil fields can only be exploited by the Venezuelan National Oil Company, so foreign companies have to withdraw in large numbers, and Venezuela has been sanctioned by various countries.
Unlike Saudi Arabia's more moderate approach, Venezuela uses extreme methods to directly force the takeover from foreign oil companies. First of all, the European and American countries where these oil companies are located have imposed severe economic sanctions on Venezuela, and oil exports have been severely restricted. With the exception of Cuba, countries in South America are afraid to trade with it. If it is sold to other continents, the high transportation cost is more than worth the loss. Secondly, under the sanctions of Western countries, Venezuela's economic situation deteriorated rapidly, the original preferential welfare system is difficult to maintain, causing dissatisfaction among the people, leading to national instability, seriously affecting the development of the oil industry, third, after the withdrawal of large oil companies in Western countries, Venezuela itself did not have the technology and talents needed to produce oil, resulting in a large amount of oil buried in the ground but unable to produce.
Venezuela's oil exports, the world's largest oil reserve in 2021, were only $15.4 billion, only 11.3% of Saudi Arabia's. Most of Venezuela's oil is heavy oil, with high sulfur content, high density, heavy metal content, even if it is extracted at a cost, it is more oil sands, which can only be sold after mixing with light oil. Saudi Arabia's oil is mainly light oil and can be sold directly. Venezuela's oil industry system is extremely backward, its domestic refining level is still stuck in the 1970s, while Saudi Arabia's oil field extraction technology is leading the world, efficient and low cost. The oil that Venezuela is now producing is buried deep, poor in oil quality and costly. Most of Saudi Arabia's oil is in the surface layer, and some of it is still self-rising, and the pressure does not need to be given. Overall, Saudi Arabia's oil costs in 2021 will only be $5 to $8 a barrel. Although Venezuela's oil reserves are among the best in the world, the cost of extraction is high, close to $50.
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