Oil reserves Totally Explained

Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground isn't a "reserve" unless it's claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally as the amount of oil remaining is reduced. The recovery factor (RF) is the percentage of oil in place which is expected to be economically recoverable under a given set of conditions.
Oil reserve estimates are ideally a measure of geological and economic risk — of the probability of oil existing and being producible under current economic conditions using current technology. The international authority for reserves definitions is generally the Society of Petroleum Engineers. The U.S. Securities and Exchange Commission demands that oil companies with exchange listed stock adopt reserves accounting standards that are consistent with common industry practice. However these standards are based on historical production practices and are not always meaningful in dealing with deep-water and non-conventional oil fields that are becoming the source of more and more of the world's oil production. In addition, many of the world's largest oil-producing countries don't follow normal industry standards in estimating their oil reserves and don't publish any data which would allow their estimates to be verified.
Proven, probable and possible reserves are the three most common categories of reserves used in the oil industry. They represent the probability that a reserve exists based on the geologic and engineering data and interpretation for a given location. Proven Reserves - defined as oil and gas "Reasonably Certain" to be producible using current technology at current prices, with current commercial terms and government consent, also known in the industry as 1P. Some industry specialists refer to this as P90, for example, ideally having a 90% certainty of being produced. Proven reserves are further subdivided into "Proven Developed" (PD) and "Proven Undeveloped" (PUD). PD reserves are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required. PUD reserves require additional capital investment (drilling new wells, installing gas compression, etc.) to bring the oil and gas to the surface. Probable Reserves - defined as oil and gas "Reasonably Probable" of being produced using current or likely technology at current prices, with current commercial terms and government consent. Some Industry specialists refer to this as P50, for example, ideally having a 50% certainty of being produced. This is also known in the industry as 2P or Proven plus probable. Possible Reserves - for example, "having a chance of being developed under favourable circumstances". Some Industry specialists refer to this as P10, for example, ideally having a 10% certainty of being produced in the foreseeable future. This is also known in the industry as 3P or Proven plus probable plus possible.

Proven reserves in order

Saudi Arabia

With a quarter of the world's proven oil reserves and some of its lowest production costs, Saudi Arabia produces over 4 gigabarrels (600 million tons) of oil per year (17 tons per second) and is likely to remain the world's largest oil exporter for the foreseeable future.However, there are serious political risks involved in Saudi Arabian domination of the world oil market.In spite of recent increases in oil income, Saudi Arabia faces serious long-term challenges, including rates of unemployment of at least 13 percent, one of the world's fastest population growth rates (its population grew sixfold since 1960), and the need for political and economic reforms (External Link

).
According to the Oil and Gas Journal, Saudi Arabia reports it has 262 gigabarrels of proven oil reserves (65 years of future production), around a quarter of proven, conventional world oil reserves. Although Saudi Arabia has around 80 oil and gas fields, more than half of its oil reserves are contained in only eight fields, and more than half its production comes from one field, the Ghawar field.
One challenge for the Saudis in maintaining or increasing production is that their existing fields sustain 5-12 percent annual decline rates, meaning that the country needs new capacity each year to compensate. The challenge is that the Ghawar field, found in 1948, has produced about half its total reserves, and is starting to run into production problems — notably, there are rumors that it's now producing more water than oil. Other Saudi fields are not only smaller, but more difficult to produce. Historically, when Saudi Arabia has run into production problems in other fields, it has simply shut them in and stepped up production in Ghawar, but if Ghawar runs into problems that no longer will be possible.
Since Saudi Arabia is the world's largest producer of oil, their reserves are analyzed very closely and estimates vary on the amount of economically recoverable oil in Saudia Arabia. The raw data are not available to outside scrutiny. The International Energy Agency has predicted that Saudi oil output will double during the next two decades, projecting production of 7 gigabarrels per year in 2020, although this seems unlikely, if only for political reasons.
A dissenting opinion regarding Saudi oil reserves came from Matthew Simmons who claimed in his 2004 book "Twilight in the Desert" that Saudi Arabia's oil production is declining, and that it won't be able to produce more than current levels — about 4 gigabarrels per year (External Link

). In addition to his belief that the Saudi fields have hit their peak, Simmons also argues that the Saudis may have irretrievably damaged their large oil fields by overpumping salt water into the fields in an effort to maintain the fields' pressure and thus make the oil easier to extract. Simmons interpretation of normal oilfield practice into a future crisis has been refuted by reservoir engineers at CERI.(External Link

) Since 1982 the Saudis have withheld their well data and any detailed data on their reserves, giving outside experts no way to verify the overall size of Saudi reserves and output. However, experts question the Saudi claim that recent declines in production are due to lack of demand (which no other producer has experienced), and pointed to the fact that the number of drilling rigs in Saudi Arabia has tripled with no comparable increase in production as similar to what happened in Texas when US production peaked and started to decline in the 1970s. This could mean that many Saudi oil wells have peaked and have begun the decline toward the end of their economic usefulness. Only with verifiable data can production and reserves increases or declines be demonstrated. According to the U.S. Energy Information Agency, Saudi oil production declined about 8% during 2006 to 8.75 million barrels per day in December.(External Link

)

Canada

Canada's proven oil reserves were estimated at 179.2 gigabarrels (billion barrels) as of January 2007, placing it second only to Saudi Arabia. Over 95% of these reserves are oil sands deposits in the province of Alberta. Although Alberta contains nearly all of Canada's oil sands and about 75% of its conventional oil reserves, several other provinces and territories, especially Saskatchewan and offshore Newfoundland, have substantial oil production and reserves.
   Total Canadian oil production was about 1.2 gigabarrels in 2006, giving Canada about 150 years of reserves at current rates. Over 99% of Canadian oil exports are sent to the United States, and contrary to popular belief, Canada and not Saudi Arabia is the United State's largest supplier of oil. The picture is complicated by the fact that Canada is both an importer and exporter of oil and refined products. In 2006, in addition to producing 1.2 gigabarrels, Canada imported 0.44 gigabarrels, consumed 0.8 gigabarrels itself, and exported 0.84 gigabarrels to the U.S. The excess of exports over imports was 0.4 gigabarrels.
   The addition of 174 gigabarrels of the vast Alberta oil sands deposits, mostly in the Athabasca Oil Sands, to proven reserves by the Alberta Energy and Utilities Board (AEUB), was controversial at the time because oil sands contain a semisolid form of oil referred to as bitumen by Canadian government authorities, rather than conventional crude oil.. The existence of the deposits (historically referred to as "tar sands") has been known for centuries since major rivers cut through the sands to reveal the bitumen in the river banks, but their development had to wait for high prices and the invention of new technology. In recent years technological breakthroughs have overcome the challenges of producing it and most Alberta oil is now non-conventional production from oil sands rather than conventional oil fields. The AEUB estimates that by 2016 Alberta oil sands production will triple to amount to 86% of the province's total oil production, and Alberta will by then be one of the largest oil producers in the world.
   The difference between crude bitumen and crude oil is somewhat arbitrary since bitumen is really just an unusually thick and viscous grade of crude oil, and many U.S. oil refineries have been modified to handle it in recent years as domestic U.S. oil production declines. The main problem is that it must be heated or diluted with solvents before it'll flow through pipelines.
   A problem for companies trading on U.S. stock markets is that outdated U.S. Securities and Exchange Commission (SEC) rules don't allow them to report oil sands production as an oil and gas activity, so they can't report their oil sands reserves as oil reserves. This can produce a seriously underestimated value for the assets of companies with large oil sands operations such as Petro-Canada.
   Analysts estimate that a price of $30 to $40 per barrel is required to make oil sands production profitable, but with oil prices rising to over $80/bbl, oil sands production has become profitable enough to trigger over $100 billion worth of new oil sands projects. The biggest constraint on oil sands development is a serious labor and housing shortage in Alberta as a whole and the oil sands center of Fort McMurray in particular. According to Statistics Canada, by September, 2006 unemployment rates in Alberta had fallen to record low levels and per-capita incomes had risen to double the Canadian average. Another problem was that Canada was running out of pipeline capacity to ship rapidly increasing exports of oil to U.S. markets, and the National Energy Board warned that exporters could face pipeline apportionment by the third quarter of 2007.
   An indicator of how the economics of oil sands had changed became apparent in July 2007 when Royal Dutch Shell stated in its annual report that in 2006 its Canadian oil sands unit made an after tax profit nearly double its worldwide profit on conventional crude. A few days later Shell announced it was going to build a $27 billion oil sands refinery near Edmonton, one of a string of oil sands upgrader announcements that could boost Canada's synthetic oil production to 3.46 million barrels per day by 2015.
   As of 2006, Canada was the only major OECD (Organisation for Economic Co-operation and Development) producer showing an oil production increase. The other major OECD producers (the United States, United Kingdom, Norway and Mexico) were all in decline. According to the Conference Board of Canada, total crude oil production in Canada is projected to increase by over 10 per cent in 2007, following an increase of 5 per cent in 2006. As a result of new nonconventional oil projects, total crude oil production is forecast to increase by an average of 8.6 per cent per year from 2008 to 2011.

Iran

Iran has the world's second largest reserves of conventional crude oil at 133 gigabarrels, according to the CIA World Factbook, although it should be noted that both Canada and Venezuela have larger reserves if Non-conventional oil is included. Iran is the second largest oil holder globally with approximately 10% of the world's oil.
Iran averages about 1.5 gigabarrels per year (88 years of future production), which is a significant decline from the 6 gigabarrels per year it produced when the Shah of Iran was in power. The United States prohibits imports of oil from Iran, which limits its exposure to an Iranian oil cutoff, but doesn't reduce the likelihood that an interruption of Iranian oil would cause a spike in world oil prices. American pressure on Iran to renounce Iran's nuclear program makes the possibility of military confrontation quite high, and the political risks of Iranian oil far outweigh any geological ones.

Iraq

Iraq has the third largest reserves of conventional oil in the world at 112 gigabarrels. Despite its vast oil reserves and low costs, production hasn't recovered since the US-led 2003 invasion of Iraq. Constant looting, insurgent attacks, and sabotage in the oil fields has limited production to around 0.5 gigabarrels per year at best. Political risk is thus the main constraint on Iraqi oil production and likely to remain so in the near future.

United Arab Emirates and Kuwait

The United Arab Emirates and Kuwait are nearly tied for the fourth largest conventional oil reserves in the world at 98 and 97 gigabarrels, respectively. Both countries produce approximately 0.8 gigabarrels per year, leaving around 100 years of reserves in each. Abu Dhabi has 94 percent of the UAE's oil reserves while most of Kuwait's oil reserves are in the Burgan Field, the world's second largest oil field after Saudi Arabia's Ghawar. Kuwait hopes to step up oil production to reach capacity of 4 million bbl/d by 2020, but since Burgan was found in 1938 and is getting very mature, this will be a challenge. Furthermore, according to data leaked from the Kuwait Oil Company (KOC), Kuwait's remaining proven and non-proven oil reserves are only about half the official figure - 48 gigabarrels (60 years of future production).

Venezuela

According to the Oil and Gas Journal (OGJ), Venezuela has 77.2 billion barrels of proven conventional oil reserves (80 years of future production), the largest of any country in the Western Hemisphere. In addition it has non-conventional oil deposits similar in size to Canada's - at 1,200 billion barrels approximately equal to the world's reserves of conventional oil. About 267 billion barrels of this may be producible at current prices using current technology. (External Link

) Venezuela's Orinoco tar sands are less viscous than Canada's Athabasca oil sands – meaning they can be produced by more conventional means, but are buried deeper – meaning they can't be extracted by surface mining. In an attempt to have these extra heavy oil reserves recognized by the international community, Venezuela has moved to add them to its conventional reserves to give nearly 350 billion barrels of total oil reserves. This would give it the largest oil reserves in the world, even ahead of Saudi Arabia. In October 2007 the Venezuelan government said its proven oil reserves have risen to 100 billion barrels. The energy and oil ministry said it has certified 12.4 billion additional barrels of proven reserves in the country's Faja del Orinoco region (External Link

) Venezuela’s development of its non-conventional oil reserves is mainly limited by political unrest. In late 2002 and early 2003 a strike at the state oil company PDVSA resulted in a dramatic drop in Venezuelan oil production and the firing of most of the oil company’s workers. This has significantly limited its ability to develop and produce oil. (External Link

) Estimates of Venezuelan oil production vary. Venezuela claims its oil production is over 3 million barrels per day, but oil industry analysts and the U.S. Energy Information Administration believe it to be much lower. In addition to other reporting irregularities, much of its production is extra-heavy oil, which may or may not be included with conventional oil in the various production estimates. The U.S. Energy Information Agency estimated Venezuela's oil production in December 2006 was only 2.5 million barrels per day (approx 0.9 gigabarrels annually), a 24% decline from its peak of 3.3 million in 1997.(External Link

) Notwithstanding that, Venezuela continues to be the second or third largest supplier of oil to the United States, sending about 1.5 million barrels per day to the U.S. Venezuela is also a major oil refiner and the owner of the Citgo gasoline chain.

United States

United States proven oil reserves declined to a little more than 21 gigabarrels by the end of 2004 according to the Energy Information Administration, a 46% decline from the 39 gigabarrels it had in 1970 when the huge Alaska North Slope ('ANS') reserves were booked. Since there have been millions of oil wells drilled in the US and there's nowhere left for an elephant the size of ANS to remain hidden, it appears that US oil reserves are on a permanent downward slide. As oil fields get closer to the end of production, estimates of what is left become more accurate. Consequently, US oil reserve numbers are very accurate compared to those of other countries.
   United States crude oil production peaked in late 1970 at over 4 gigabarrels per year, but declined to 1.8 gigabarrels per year by early 2006 (only 11 years of future production). In fact, production in the fall of 2005 fell to only 1.5 gigabarrels per year as a result of hurricanes in the Gulf of Mexico — a level not seen since shortly after World War II. At the same time, US consumption of petroleum products increased to over 7.3 gigabarrels per year. The difference (5.5 gigabarrels ) was mostly made up by imports, with the largest supplier being Canada, which increased its exports of crude oil and refined products to the US to 0.8 gigabarrels per year at the end of 2005. Imports of oil and products now account for nearly half of the US trade deficit. In early 2007, the Energy Information Agency (EIA) of the U.S. Department of Energy projected that in 2007 oil consumption would rise to 20.9 million barrels per day, while oil production would fall to 5.1 million barrels per day, meaning that oil consumption would be nearly four times as high as oil production.
   The United States has the largest known concentration of oil shale in the world, according to the Bureau of Land Management and holds an estimated 800 gigabarrels of recoverable oil, enough to meet U.S. demand for oil at current levels for 110 years. Unfortunately, oil shale is much more difficult and expensive to extract and refine than conventional oil and oil sands. Oil shale must be produced by mining rather than drilling, and the shale contains a waxy oil precursor known as kerogen rather than liquid petroleum. Despite that, oil shale could be developed given high enough oil prices, and the technology for converting oil shale to oil has been known since the Middle Ages, although the scale of the mining and processing operations would be vastly greater than anything done in history.
   The main constraint on oil shale development is probably going to be that Canadian and Venezuelan oil sands are only about half as expensive to produce, and the US has full access to Canadian oil sands production under the North American Free Trade Agreement (NAFTA). In addition, there are environmental concerns about oil shale development. The oil shale areas are semi-arid, in which mine scars last for centuries, and are at the headwaters of several important rivers, notably the Powder River in a region in which water rights are very important. These rivers are the source of irrigation water for vast areas of farmland and are the source of drinking water for many major cities. As a result, the oil shales are probably not going to be developed until global oil shortages become very severe.
   In December, 2006, the Bureau of Land Management of the US Department of the Interior issued research, development, and demonstration (RD&D) leases for five oil shale projects in Colorado's Piceance basin.

Mexico

While the government of Mexico claims it has over 100 gigabarrels of oil, as of January, 2006, the prestigious Oil and Gas Journal estimated its proven reserves at only 12.9 gigabarrels. The reason for the discrepancy is that, while the oil may exist in theory, in practice, politics prevents it from being developed. The constitution of Mexico gives the state oil company, PEMEX, a monopoly over oil production, and the Mexican government treats Pemex as a major source of revenue, taking 60% of its revenues in taxes, according to Business Week on 13 December 2004. As a result, Pemex has insufficient capital to develop the resources on its own, and can't take on foreign partners to supply money and technology it lacks.
   Since 1979, Mexico has produced most of its oil from the supergiant Cantarell Field, which is the second-biggest field in the world by production. In 1997, PEMEX started a massive nitrogen injection project to maintain oil flow, which now consumes half the nitrogen produced in the world. Unfortunately, non-miscible injection schemes such as nitrogen injection simply increase production rates rather than increasing the amount of oil that can be recovered, and result in the same amount of oil being produced over a shorter period of time. As a result of nitrogen injection, production at Cantarell rose from 1.1 million barrels/day in 1996 to a peak of 2.1 million barrels per day in 2004. However, during 2006 Cantarell's output fell 25% from 2.0 million barrels/day in January to 1.5 million barrels/day in December, and the decline continued at a higher than expected rate in 2007.
   As for its other fields, 40% of Mexico's remaining reserves are in the Chicontepec Field, which was found in 1926, but which has remained undeveloped because the oil is trapped in impermeable rock. The remainder of Mexico's fields are much smaller, much more expensive to develop, and contain heavy oil that trade at a significant discount to light-oil which is cheaper to refine. As a result of concentrating on its one good oil field and ignoring everything else, Mexico's proven reserves have fallen every year for more than a decade, and it has less than 10 years worth of oil reserves at current production levels. As a result of the decline in the Cantarell field, during 2006 Mexico's total petroleum production dropped 12% from 3.4 million barrels/day in January to 3.0 million barrels/day in December.
   In 2002 PEMEX began developing an oil field called "Proyecto Ku-Maloob-Zaap", located 105 kilometers from Ciudad del Carmen. It is estimated that by 2011 the field will produce nearly 800,000 barrels/day (External Link

). However, this level of production will be achieved by using a nitrogen injection scheme similar to that of Cantarell, and production at Ku-Maloob-Zaap is expected to decline after 2011.
In June, 2007 former U.S. Federal Reserve Chairman Alan Greenspan warned that declining oil production in Mexico could cause a major fiscal crisis there, and that Mexico needed to increase investment in its energy sector to prevent it. (External Link

)

Arctic reserves

Arctic basins tend to be richer in natural gas than in oil. The abundance of gas in the Arctic so far from main markets will require moving gas long distances. Problems of ensuring that oil and gas keep flowing freely in arctic subsea pipelines are virtually identical to those experienced at a depth of 8,000 feet in the Gulf of Mexico, where temperatures are at or close to the freezing point (at that pressure) along the seafloor where hydrates can form. Technology for moving oil from the seafloor to the shore is similar to that employed in Norway, and may someday have application in Alaska.
Some large oil companies believe Arctic waters, including those of northern Alaska, hold great potential as an oil and natural gas frontier. Most of these basins are unexplored and undeveloped. The social, environmental, and economic aspects of development will be challenging.
Extensive drilling in the Canadian Arctic by such companies as Petro Canada and Dome Petroleum discovered significant oil reserves, but not enough to justify an oil pipeline to southern Canada or the United States. All the oil wells which were drilled have since been abandoned. Currently, the Arctic ice pack makes the shipping season too short to justify shipping oil out by tanker, but it's possible future global warming could melt the Arctic ice pack and make tanker shipment feasible. In 2007 the Canadian Navy announced its intention to build eight new Arctic patrol vessels to assert sovereignty over its Arctic waters in anticipation of such an eventuality.

Middle Eastern reserves

There are varying estimates of how much oil is left in Middle Eastern reserves. Several oil companies and the U.S. Department of Energy state that the Middle East has two-thirds of all the world's oil reserves. Other oil experts, however, argue that the Middle East has two-thirds of only all proven oil reserves, and that the percentage of all oil reserves it has could be much lower than two-thirds (External Link

). The U.S. Geological Survey says that the Middle East has only between half and a third of the recoverable oil reserves in the world.

Suspicious official estimates of oil reserves from OPEC countries

The OPEC countries decided in 1985 to link their production quotas to their reserves. What then seemed wise provoked important increases of the estimates; in order to increase their production rights. This also permits the ability to obtain bigger loans at lower interest rates. This is a suspected reason for the reserves rise of Iraq in 1983, then at war with Iran.
In fact, Dr. Ali Samsam Bakhtiari, a former senior executive of the National Iranian Oil Company, has stated unequivocally that OPEC's oil reserves (notably Iran's) are grossly overstated. In a recent interview (External Link

) he stated that world oil production is now at its peak and predicted that it'll fall 32% by 2020.

Declared reserves with suspicious increases (in billion of barrels) Colin Campbell, SunWorld, 80-95
Year	Abu Dhabi	Dubai	Iran	Iraq	Kuwait	Saudi Arabia	Venezuela
1980	28.00	1.40	58.00	31.00	65.40	163.35	17.87
1981	29.00	1.40	57.50	30.00	65.90	165.00	17.95
1982	30.60	1.27	57.00	29.70	64.48	164.60	20.30
1983	30.51	1.44	55.31		64.23	162.40	21.50
1984	30.40	1.44	51.00	43.00	63.90	166.00	24.85
1985	30.50	1.44	48.50	44.50	90.00	169.00	25.85
1986	31.00	1.40	47.88	44.11	89.77	168.80	25.59
1987	31.00	1.35	48.80	47.10	91.92	166.57	25.00
1988	92.21	4.00	92.85	100.00	91.92	166.98	56.30
1989	92.20	4.00	92.85	100.00	91.92	169.97	58.08
1990	92.20	4.00	93.00	100.00	95.00	258.00	59.00
1991	92.20	4.00	93.00	100.00	94.00	258.00	59.00
1992	92.20	4.00	93.00	100,00	94,00	258.00	62.70
2004	92.20	4.00	132.00	115.00	99.00	259.00	78.00
2007	?	?	136.30	115.00	101.50	262.30	80.00

The world's total declared reserves are 1317.4 billion barrels (jan 2007). The years 2004 and 2007 were added later. Some figures from the year 2007 are missing because these are from a listing in the Oil and Gas Journal from dec. 2006, which listed only the top ten suppliers.
   The table suggests that, firstly, the OPEC countries declare that the discovery of new fields, year after year, replaces exactly or near exactly the quantities produced, because the declared reserves don't vary a lot from one year to the other. For example, Saudi Arabia extracted 9.55 million barrels per day in 2005, for example 3.4 billion barrels a year. Yet, their stated reserves don't decline, implying that they discover previously unknown reserves of exactly this amount, year after year. Abu Dhabi, in the United Arab Emirates, declares exactly 92.3 billion barrels since 1988, but in 16 years, 14 billion barrels were extracted.
   Also, there's much competition between states. For example, Kuwait gave to themselves 90 billion barrels of reserves in 1985, the year of the reserves link. Abu Dhabi and Iran responded with slightly higher numbers, to guarantee similar production quotas. Iraq replied with around 100. Apparently, with all this amount of inflation, Saudi Arabia was forced to reply, two years later, with its own revision.
   Other examples suggest the inaccuracy of official reserve estimates:

January 2006, the magazine Petroleum Intelligence Weekly declared that reserves of Kuwait were in fact only 48 billion barrels, of which only 24 billion were "completely proven", backing this statement on "leaks" of official confidential Kuwaiti documents. The value is half of the official estimate.(External Link)

Shell company announced 9 January 2004 that 20% of its reserves had to pass from proven to possible (uncertain). This announcement led to a loss in the value of the stock; a lawsuit challenged that the value of the company was fraudulently overvalued. Shell later revised its reserves estimates three times, reducing them by 10,133 million barrels (against 14,500 million). Shell's president, Phil Watts, resigned.

As can be seen on the table the reserves declared by Kuwait before and after the Gulf War 1990-1991 are the same, 94 billion barrels, despite the fact that immense oil-well fires ignited by the Iraqi forces had burned off approximately 6 billion barrels.

In 1970, Algeria increased its "proven reserves" estimate (until then 7-8 billion barrels) to 30 billion. Two years later, the estimate was increased to 45 billion. After 1974, the country's estimate was less than 10 billion barrels (as reported by Jean Laherrère).

Pemex (state company of Mexico) in September 2002 decreased its reserve estimate by 53%, from 26.8 to 12.6 billion barrels. Later the estimate was increased to 15.7 billion.

Other examples exist of reserves being underestimated. In 1993, the reserves of Equatorial Guinea were limited to some insignificant fields; the Oil And Gas Journal estimated them at 12 million barrels. Two giant fields and several smaller ones were discovered, but the numbers announced stayed unchanged until 2003. In 2002, the country still had 12 million barrels of reserves according to the journal, while it was producing 85 million barrels in the same year. The reserves of Angola were at 5.421 billion barrels, (four significant numbers, it gives the impression of great precision) from 1994 to 2003, despite the discovery of 38 new fields of more than 100 million barrels each. Note however that the definition of proven reserves varies from country to country. In the USA, the conservative rule is to classify as proven only the reserves that are being produced. On the other hand, Saudi Arabia classifies as proven reserves known fields not yet in production. Venezuela includes non-conventional oil (bitumens) of the Orinoco in its reserve base.

2020 Vision

The US EIA (Energy Information Administration) reduced their forecast for Saudi oil production to 15.4 mb/day in 2020 and Middle East OPEC countries increasing to 35.2 mb/day by 2020 from 20.7 mb/day in 2002 [InternationEnergy Outlook 2005 table E1 [http://www.eia.doe.gov/oiaf/ieo/pdf/0484(2005).pdf]. These estimates were further reduced in the 2006 Annual Energy Outlook, in which Middle East OPEC production was projected to be 29.4/27.0/18.5 mb/day in 2020 assuming $34/$51/$85 oil prices respectively (External Link

Strategic oil reserves

Many countries maintain government-controlled oil reserves for both economic and national security reasons. Although there are global strategic petroleum reserves, the following highlights the strategic reserves of the top three oil consumers.
   The United States maintains a Strategic Petroleum Reserve at four sites in the Gulf of Mexico, with a total capacity of 0.727 gigabarrels of crude oil. The sites are enormous salt caverns that have been converted to store crude oil. The US SPR has never been filled to capacity; the largest amount reached thus far was 0.7 gigabarrels on August 17, 2005, whereafter reserves were drawn down to meet demand in the aftermath of Hurricane Katrina. This reserve was created in 1975 following the 1973-1974 oil embargo, and as of 2005 it's the largest emergency petroleum supply in the world. At current US consumption rates (over 7 gigabarrels per year), the SPR would supply all normal US demand for approximately 37 days.
   In 2004 China's National Development and Reform Commission (NDRC) began development on a 101.9 million barrel strategic reserve. This strategic reserve plan calls for the construction of four storage facilities. An updated strategic reserve plan was announced in March 2007 for the construction of a second strategic reserve with an additional 209.44 million barrels. Separately, Kong Linglong, director of the National Development and Reform Commission's Foreign Investment Department, said that the Chinese government would soon move to establish a government fund aimed at helping its state oil groups purchase offshore energy assets.
   As of 2003 Japan has a SPR composed of the following three types of stockpiles; state controlled reserves of petroleum composed of 320 million barrels, privately held reserves of petroleum held "in accordance with the Petroleum Stockpiling Law" of 129 million barrels, privately held reserves of petroleum products for another 130 million barrels. The state stockpile equals about 92 days of consumption and the privately held stockpiles equal another 77 days of consumption for a total of 169 days or 579 million barrels. These reserves are particularly important for Japan since they've practically no domestic petroleum production and import 99.7% of their oil.

OPEC countries

Many countries with extensive oil reserves are members of the Organization of the Petroleum Exporting Countries, or OPEC. The members of the OPEC cartel hold about two-thirds of the world's oil reserves, allowing them to significantly influence the international price of crude oil.

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