Oct 04, 2012
Opec believed to overstate oil reserves by 70%Back
New York|Toronto|Mining|Petroleum|Systems|transport|Saudi Arabia|Venezuela|Cumulative Oil Production|Equipment|Oil|Oil Prices|Oil Reserve Statements|Oil Reserves|Oil Shortages|Oil-producing Countries|Stated Oil|Stated Recoverable Oil Reserves|Systems|Brent Giles|Drilling|Rick Nariani|Fracturing
© Reuse this
Global oil prices are expected to dramatically spike from the end of the decade as a result of depletion, and continue to dramatically rise into the future as a result of oil-producing countries being unable to replace reserves fast enough, research specialist Lux Research analysts told Mining Weekly Online on Thursday.
Researchers said the known oil reserves of Opec members would be depleted much sooner than thought, owing to many of the member countries producing much more oil than what they could sustain over the long term.
Oil, gas and mining analyst Rick Nariani said Opec’s stated reserves skyrocketed from 878-billion barrels to 1.2-trillion barrels throughout the 1980s and 1990s, without any new significant discoveries being made. With cumulative oil production of 449-billion, the true reserves for Opec could be as low as 428.94-billion, which would result in global price shocks by 2020.
He explained certain Opec members were deliberately increasing their stated oil reserves to flout Opec regulations, which allowed oil-producing countries to only produce oil at a rate calculated as a certain percentage of its total reserves.
“We now know that the numbers are significantly inflated. The model we have built from available data shows that Opec reserve statements could be overstated by as much as 70%,” Nariani said.
Nariani, who is co-authoring a report, ‘The Race to Replace Reserves’, which is due for publication during the next couple of weeks, told Mining Weekly Online that the official figures did not add up. He said that given certain new discoveries of oil, such as in Venezuela and certain technological advances which allow for previously uneconomical known deposits to be exploited, many Opec countries continued to increase their oil reserves, without announcing any new discoveries, and, all that while producing significant amounts of oil.
Nariani and report co-author Brent Giles believe global oil reserves would be depleted much sooner than thought.
Global stated recoverable oil reserves, including conventional and unconventional sources, total 1.65-trillion barrels, or 54 years of supply. If one adjusted the remaining oil reserves for population growth and nominal increases to per capita consumption rates, oil shortages could occur 18 years earlier than that, the analysts said.
That means global oil shortages within 36 years. For example, Saudi Arabia had already admitted to oil reserves declining by 8% a year since 2004, the analysts said.
However, Giles held that global oil consumption, driven higher by the increasing wealth of developing Asian and African countries, would overtake production by 2020, resulting in significant price instability.
He pointed to the need for global production to significantly increase by 2035 to meet demand, and this would need significant new reserves coming on line.
“In order for the oil companies to meet future oil demand, they would have to replace current reserves at a rate of 5.4% a year. This would allow for a supply of oil for about another 90 years,” Giles said.
On its website, Opec said its "member countries have made significant additions to their oil reserves in recent years, for example, by adopting best practices in the industry, realising intensive explorations and enhancing recoveries".
The organisation held its proven oil reserves currently stood at "well above 1.19-trillion barrels".
The researchers said technology would be critical to unlocking potential from resource reserves, such as the 4.6-trillion barrels of oil shale deposits found in American soil. New techniques and technological applications would play an increasingly critical role in discovering new reserves.
Under these technological advances counted advanced materials for drilling equipment, fluids and additives at high pressure and temperature, targeted delivery and the controlled release of chemicals and materials, alternative fracturing techniques, enhanced recovery and beneficiation, advanced proppants, down-hole and reservoir sensors and brine and nonconventional mining systems.
The discovery of shale gas had also transformed the fossil fuel industry, with many oil-dependent applications being able to switch to cleaner and cheaper natural gas.
“There is today a lot more natural gas than previously thought. This is a good fuel source with abundant supply for still a very long time,” Nariani said.
The analysts said new technology would lead the way to also make it economical to produce from previously uneconomical reserves.
Further, Giles pointed out that the demand for oil could also be significantly reduced, particularly within the transport industry where the advent of clean technology is only now starting to materialise.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Oil and Gas News
Updated 7 hours ago The Portfolio Committee on Mineral Resources on Thursday said it needed a comprehensive report, as well as insight into the relevant legislation, regarding hydraulic fracturing, or fracking, in South Africa. “This information will empower us to understand all the...
Updated 4 hours ago Irish Foreign Affairs and Trade Minister Charles Flanagan told media on Thursday that Ireland was well positioned to play a greater role in Africa, particularly in the aviation, pharmaceuticals and agricultural industries. Flanagan was this week leading a high-level...
Updated 4 hours ago The Lesotho Highlands Development Authority (LHDA) has appointed three consultants for work packages as part of Phase 2 of the Lesotho Highlands Water Project (LHWP). The contracts, worth a collective M40-million, were awarded to the SMEC-FMA joint venture (JV);...
Updated 4 hours ago JSE-listed Huge Telecom continued to grow its distribution capabilities during the year ended February 28, with the number of business partners increasing by 136, or 47%. Huge Telecom’s connectivity services, which were distributed mainly to small and medium...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...