Chavez reelction to influence global oil supplies

While the presidential election to be held in Venzuela tomorrow has attracted world attention thanks to giant rallies in the capital Caracas, the global significance of the event owes much to the fact that Venezuela has overtaken Saudi Arabia to become number one in the world for proven oil reserves.

Whether the multi-trillion dollar asset is controlled by president Hugo Chavez or the opposition challenger Henrique Capriles, would play a key role in determining which countries and companies are given the priority to exploit the assets and how much motorists around the world will pay at the pump.

According to a report this year by BP, Venezuela reserves stood at 296.5 billion barrels, around 10 per cent more than Saudi Arabia and 18 per cent of the global total. Given the country's current levels of production, the reserves are expected to last 100 years.

If Chavez were to win as most polls seem to suggest, he would ramp up production and reduce his country's dependence on the US market by doubling crude exports to Asia. To give effect to the push towards Asia, Venezuela plans to build a pipeline through Colombia to the Pacific which would reduce costs and transport times to China and other Asian markets.

According to Capriles, who has mounted a strong challenge, he would axe oil minister Rafael Ramírez and rethink how crude is extracted and used. Until now, the biggest deals for future exploitation have have been bagged by Russian and Chinese companies.

He said every deal would have to be revised as these were agreements that were not functioning.