Kuwaiti Reserve Reverse
Today we receive the incredible news that Kuwait’s oil reserves may actually only be half what they are said to be. The Reuters article says:
Kuwait oil reserves only half official estimate-PIW
OPEC producer Kuwait’s oil reserves are only half those officially stated, according to internal Kuwaiti records seen by industry newsletter Petroleum Intelligence Weekly (PIW).“PIW learns from sources that Kuwait’s actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records,” the weekly PIW reported on Friday.
It said that according to data circulated in Kuwait Oil Co(KOC), the upstream arm of state Kuwait Petroleum Corp, Kuwait’s remaining proven and non-proven oil reserves are about 48 billion barrels.
Link
That already sounds pretty incredible but there are far more serious ramifications if this is in fact true. Read on.
One way to calculate when global peak oil will occur is to make an assessment of the ultimate amount of oil that will be recovered and to assume that the peak flow rate will occur once half of this ultimate total has been extracted (which seems to be true of smaller individual fields and provinces now well past their peaks). The tricky part is obviously making an accurate assessment of the ultimate recoverable reserves.
It is widely agreed that there isn’t much oil out there left to be found, the rate of discovery peaked in the mid sixties and annual discoveries have been on a downward trend for the last 40 years. For the last two decades each year we have extracted more oil than was found. This trend can be seen below.
(Source)
Oil companies don’t always report the full volume of an oil field when it is first discovered for various commercial and technical reasons so this graph correctly associates later announcements to the year the field in question was originally discovered.
There was one set of such revisions that look particularly suspect though. Between 1983 and 1990 the members of OPEC all announced dramatic reserve additions without announcing any new discoveries. This table lists stated reserves in billions of barrels (Gb) with the suspect additions highlighted:
Selected Reported Reserves (Gb) with Suspect Increases (source)
Adding suspicion to these dramatic increases is that fact that OPEC had in 1982 just one year before the Iraqi revision in 1983 allocated production quotas to each member to ensure no single country flooded the market lowering the price for all. These quotas were based on the countries stated reserves, if your reserves increase your quota increases allowing more oil to be sold and more money made.
These increased figures have never been audited by an outside agency; we have absolutely no way of verifying their accuracy, just their word for it. The other interesting point is that despite annual production of billions of barrels the stated reserve figures have not decreased to this day from the increased figures of over 15 years ago. They have, according the 2005 BP Statistical Review actually seen small increases.
So going back to the Reuters story, the claim is that instead of 99bn barrels Kuwait’s reserves are actually more like 48bn, some 16bn barrels less than the original stated reserves in 1985.
And guess what, over the last 20 years Kuwait has produced some 13-15bn barrels of oil in total and lost around 2bn barrels during the first Gulf war.
The smoking gun – if what Reuters are reporting is true not only was the Kuwaiti revision an illusion, nothing more than an economic fiddle but it is also likely that all the other OPEC revisions are similarly without merit and today is the day we learn the world has a lot less oil than we thought and that global peak oil must occur imminently.
This post was written by Chris Vernon
This entry was posted on Friday, January 20th, 2006 at 10:26 pm and is filed under Hydrocarbon Depletion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
January 21st, 2006 at 9:06 am
Next SA, Iran, ect… I think those 1980’s figures were the most acurate…this Kuwait reply ..why does it surprise anyone? Nothing new here….
January 21st, 2006 at 10:08 am
CLV Said:OPEC revisions are similarly without merit and today is the day we learn the world has a lot less oil than we though and that global peak oil must occur imminently.
Saidly no-one or no-government is doing hardy anything about this! I wonder how this will effect people’s peak oil predictions. If Kuwait doesnt come back with an answer to this reuters post…then does this inturn effect your PO date CLV? I was thinking PO 2007-2010 time..But this sure does add play…though non surprising and almost guessed this would happen..it does add a spin to things. All of these things and the innumerable lies used by the media and OPEC will finally bear their bitter, bitter fruit. For the wages of spin are death.
January 21st, 2006 at 2:50 pm
There is also a positive aspect to the news that Opec reserves might be smaller than pretended. Smaller oil reserves mean that the oil party will end sooner which means less future human suffering, less damage to the atmosphere etc etc. The ultimate question is: Should we humans use the resources of this planet yes or no. If the answer is yes, then it is unavoidable that we as a species will use it up as quickly as possble. This means that if we wish to survice as species on this planet, it is actually in our long term insterest if energy reserves are limited so the global damage due to their excessive usage is not that large.
January 21st, 2006 at 4:01 pm
Great post! Don’t know if you noticed, but it was quoted at PeakOil.com. Excellent work on the dramatic fictitious growth in reserves: it certainly makes it more real to see in a chart than have it described.
January 21st, 2006 at 6:13 pm
Excellent post. So to me, it looks like the last year the Kuwait gave reputable information on its oil reserves (1984), they said they had 63.9 Gb. Now, PIW is reporting that they have 48 Gb as of now. Given how much they have been pumping over the last 21 years, wouldn’t 48 Gb be just about what we should expect to see?
January 21st, 2006 at 7:58 pm
Well yeah.
Even with the reserves previously admitted and including Canada’s 176 billion barrels of shale, there was only 34 years of actual oil left in the ground, meaning we are about to peak anyway
But if OPEC all revise reserves in a way similar to Kuwait, then we peaked in 2003 or 2004!
The IEA’s latest graphs show no raising in production for the last year yet the demand is ever increasing. I think we’re there.
No wonder the US want Iran’s oil now!
But if the markets study this then the only way to save the economy is $100 a barrel ASAP to force people to conserve but either way the woes are going to be serious and long lasting
January 21st, 2006 at 9:28 pm
Kevo said:But if the markets study this then the only way to save the economy is $100 a barrel ASAP to force people to conserve but either way the woes are going to be serious and long lasting
True, Imagine the UK if peak was in 2004? They will face mass starvation by arounf 2016 time then. Chris vernon is from there..but has been warned….so my hands are off that! As Kunstler says “we are now in uncharted territory” Though I do think the USA and world economy can pretend a bit longer “till around 2010 max if PO ws 2005.
Get your house in order now! Take care of your own ass…!
January 21st, 2006 at 10:39 pm
The absurd nature of the reported OPEC reserves was noted by L. F Buz Ivanhoe in the first issue of the Hubbert Center Newsletter
http://hubbert.mines.edu
January 21st, 2006 at 11:25 pm
Leaf said:
“True, Imagine the UK if peak was in 2004? They will face mass starvation by arounf 2016 time then. ”
Nonsense. The UK is a grain exporter. Download the excel document from this page:
http://www.statistics.gov.uk/statbase/ssdataset.asp?vlnk=5690
…and have a think about it. Note the fossil fuel use by agriculture, including fertilliser and pesticde inputs (which are shown in their own categories) as a proportion of total fossil fuel use. Tiny. The most recent figures are shown in the right hand column.
The UK could become self sufficient in food, especially if we took a leaf out of the Russians book. 60% of the Russians fruit and veg consumption is homegrown in gardens dachas and allotments. If neccessary the same could apply here where a large proportion of the population have a garden or access to allotments. A significant portion of the country is covered isn non-productive weedy lawn and flowerbeds. If cultivated intensively even on a part time basis, it could be hugely productive.
Our diet would be quite boring compared to our current ‘globalised’ diet but I cant see us starving any time soon, even in the event of a global energy shortage. Mass motoring and mass air travel are going to die before we do. There is a lot of inessential slack in the system,
January 22nd, 2006 at 7:51 am
Yeah the UK could do lots of stuff…They Just are not doing them! I also said could face starvation by later next decade..reason due to your screwed up overpaid workers will strike..from truckers to whatnot..Remember the stikes in 2000? You were 1 week from a food crisis!
Those spred sheets are all looks good on paper.
Ive went around the UK post peak oil on peakoil.com ..read those there.
Lots of slack in the system….yeah like 1 week and all the food iteams on your shelves are cleared out..i dont see many people with rot cellars with stored can foods and potatoes. Quit living in a fairy tail! The early stages of peak oil may be upon now with the new data comming from OPEC..thus the UK when it see expensive oil and gas..many jobs will sink , truckers strike, I feel early peak oil the UK will be going though the ringer! Then comes then comes the age of scarcity….
January 22nd, 2006 at 5:15 pm
“Those spred sheets are all looks good on paper.”
leaving aside the misspelling and lack of grammar…
They also look good on screen. Did you actually look at them? The point being how little energy agriculture uses as a percentage of the whole.
And yes there is a huge ammount of slack in the system. A large portion of our energy usage is optional, not essential. We also have a lot of agricultural land in ’set aside’
There is also a difference in our expectations. You seem to expect Peak Oil - which may already have happenened in the case of conventional crude - will result in the sky turning into a storm of fire and brimstone overnight. I don’t. Of course a lot depends on the post peak decline curve. The shallower the better, obviously. Nobody knows what the global decline rate will be but hopefully not as steep as the North Sea!
Lets compare notes in ten years time or so. Should be able to disentangle whats what by then.
“I feel early peak oil the UK will be going though the ringer! ”
Why? The last time I looked the UK was still a net oil exporter (just -not for much longer) We actually benefit from high oil prices. Gordon Brown just whacked the Oil Co’s with a windfall profits tax
The countries with the least strong economies are the ones that will be put through the ringer. $60 oil is already having a marked impact in Africa. “Demand destruction” is already happening in Zimbabwe and elsewhere.
January 23rd, 2006 at 2:55 am
“The countries with the least strong economies are the ones that will be put through the ringer. $60 oil is already having a marked impact in Africa. “Demand destruction” is already happening in Zimbabwe and elsewhere.”
Yes, but countries such as Zimabwe are pygmies when it come to energy consumption (23,000 bpd, 2001 est.), so it is disingeneous to compare them to say UK or even Australia. Keep your eye on the top 20 (including the UK) which consume over 75% of the oil per day. Watch how their economies react under the strain of the end of cheap oil as the years unfold.
“Nobody knows what the global decline rate will be but hopefully not as steep as the North Sea!”
According to Chris Skrebowski, ExxonMobil etc, current supply is depleting at between 5-8% per annum. At these rates by 2015 the world will need to bring into production anywhere between 12 and 17 bb p/d of new oil just to stand still based on last years demand, which is currently increasing at 1.5% p.a.
“And yes there is a huge ammount of slack in the system. A large portion of our energy usage is optional, not essential.”
Optional energy usage will probably result in making the problem worse because a lot of jobs are dependent on all that excess and waste.
“We also have a lot of agricultural land in ’set aside’.” What, for fox hunts?
The last time I looked the UK was still a net oil exporter (just -not for much longer).”
British North Sea oil production peaked in 1999. Then output stood at just over 3 million barrels a day. Latest figures put that output today at around 1.5 million barrels per day. Jsut ask the UK Dept. of Trade & Industry.
January 23rd, 2006 at 7:18 am
Not only that the nat gas situation is very gloomy for the UK. They are really in a no win situation now with overpopulation, multicult, consummer rates, suberbia,. infastructor, and the list goes on….also one cant realistic compait the fall of teh USSR or Zimbabwee to the current UK and when it faces collapse. Just way dtoo many factors at play. I’ve did a piece over on the Europe peakoil.com board about the UK and farming. Worth a look. As a small scale farmer I can tell you when it comes time for the UK to transition…..it will be very disorderly!