Lagniappe

 

 

Global Insight :
MENA Oil reserves grow by 11% in 2003-08

 

Global Insight Perspective

The Middle East and North Africa region's oil reserves have increased by 82 billion barrels over the past five years, according the Energy Information Administration (EIA).


Significance

The reported increase in proven oil reserves of the Middle East and North Africa (MENA), from 729 billion barrels in 2003 to 811 billion barrels in 2008, dwarfs additions to reserves in the rest of the world put together over the same period, implying that oil revenue will remain the region's dominant source of foreign exchange.

Implications

Several MENA countries witnessed sizeable increases in their proven reserve levels during this period, including Saudi Arabia, Kuwait, Libya, and Iran. With the information about reserves controlled by these countries' respective governments, the estimates could very well overstate reserve levels and should be viewed with caution.

Outlook

Uncertainty about the true size of the region's proven reserves represents a major risk to any assessment of the region's capacity to remain the global economy's supplier of last resort.

Recent estimates released by the EIA in its 2008 World Energy Outlook report showed that the world's total proven crude oil reserves have increased by 119 billion barrels since 2003, rising from 1.21 trillion barrels to 1.33 trillion barrels in 2008. Close to 70% of this increase was attributed to rising reserve levels in the MENA region. Indeed, MENA's proven oil reserves have grown by 82 billion barrels over the past five years, to 811 billion barrels in 2008. The bulk of this rise came from the Middle East, with four countries accounting for a 63-billlion-barrel increase in reserves. Iran reported the biggest increase, of 49 billion barrels in oil reserves, over the period 2003-08, to 138 billion barrels. Iraq, Kuwait, and Saudi Arabia accounted for the remainder of the Middle East's rise in reserves. Kuwait's proven oil reserves have grown by nearly 8 billion barrels over the last five years, leaving the Gulf state with a current level of 104 billion barrels. Saudi Arabia's oil reserves grew to 267 billion barrels in 2008, an increase of 5 billion barrels over 2003’s figure, while Iraq's oil reserves increased by about 3 billion barrels, to reach a total of 115 billion barrels. Yemen, however, witnessed fall in its proven oil reserves of 1 billion barrels in 2007, with the level remaining constant in 2008. This is a significant decline given that the country's oil reserves amount to a meagre 3 billion barrels.

North Africa, which possesses far smaller oil reserves than the Gulf region, has also witnessed a rise in oil reserves since 2003. Total proven crude oil reserves in North Africa increased from 43 billion barrels in 2003 to nearly 63 billion barrels in 2008, representing a 19-billion-barrel increase. Libya's oil reserves have grown by 12 billion barrels over the past five years, to 41 billion barrels. Proven oil reserves in Algeria rose to an estimated 12 billion barrels in 2008, from just 9 billion barrels in 2003. Meanwhile, Sudan's oil reserves, which had held steady at just under 0.6 billion barrels until 2007, jumped to 5 billion barrels. Although Sudan's reserves remain comparably small, the large jump highlights the degree of development in the country's oil sector in recent years.

Outlook and Implications

Several MENA countries have presented sizeable increases in their proven reserve levels over the past five years. Saudi Arabia, the largest economy in the MENA region and the biggest OPEC oil producer, maintained its position as the holder of the largest proven oil reserves in the world. With the information about reserves controlled by these countries' respective governments, the estimates could very well overstate reserve levels and should be viewed with caution. Indeed, the world's super-giant oilfields were nearly all discovered prior to the 1970s—some as long ago as the early 1930s. More recent oilfield discoveries have generally been very small. Moreover, the MENA region pumped out around 50 billion barrels of crude oil during 2003-07. The reported increase in proven reserve levels therefore implies that new discoveries and/or improved recovery factors were more than sufficient to cover production and add to oil initially in place. The United Arab Emirates have maintained its proven oil reserves at about 98 billion barrels for more than 20 years, while pumping out more than two million barrels per day. Certainly, the 49-billion-barrel jump in Iran's proven oil reserves looks suspicious.

Given the surging growth in energy demand, MENA oil producers will have to raise production levels over the coming years. High global oil prices have jumpstarted upstream oil-sector investment and should eventually lead to a gradual expansion of the region's production capacity. Rising output levels to meet growing demand, however, will deplete MENA's oil reserves at a faster rate, thereby threatening the long-term economic outlook of these countries. Oil remains the life blood of the MENA economies, and oil reserves underpin the long-term strength of these economies. With most of the Gulf's oil output coming from very old fields, new fields will not only be of smaller size, but more costly to extract. Indeed, some of MENA’s smaller oil producers like Oman, Syria, and Yemen are now faced with declining production levels given the maturation of their major fields. Iraq is an exception, however, since most of its oilfields remain relatively undeveloped and there is the potential for new, large discoveries

 

The author Bryan Plamondon is economist with a Global Insight. Petroleumworld does not necessarily share these views

Editor's Note: For more information on Global Insigth, contact: Catarina Feria-Walsh Global Insight, catarina.walsh@globalinsight.com. / www.globalinsight.com.
Petroleumworld reprint this article in the interest of our readers.

All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.

Fair use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.

All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Internet web links to http://www.petroleumworld.com are appreciated

Petroleumworld welcomes your feedback and comments: editor@petroleumworld.com. By using this link, you agree to allow E&P to publish your comments on our letters page.

Petroleumworld News 03/13/08

Copyright© 2008 respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.

 

Send this story to a friend

Your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.

Write to editor@petroleumworld.com

Any question or suggestions, please write to:
editor@petroleumworld.com

Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels