ASPO: Further Reflections on Middle East Reserves

Undoubtedly, the most important question to try to resolve in modelling future world oil production is the true size of Middle East reserves. It is obvious that the official reports of remaining reserves are grossly unreliable, as even the industry databases can hardly do other than report what they are officially told. But the historical record may have something to tell us.

Kuwait reported reserves of 65 Gb in 1980, falling to 64 Gb by 1984 in the absence of new discovery, at which point it had produced a total of 21.5 Gb, indicating that the total discovery was 85.5 Gb. The bulk lay in the Burgan Field, found in 1938, with 60 Gb, whose reserves were well known to the foreign industry. Next in size were Raudhatain (1955) with 9 Gb; Sabriya (1957) with 5.5 Gb; Minagish (1959) with 3.5 Gb; Umm Gudair (1962) with 3 Gb; Ratga (1977) with 1 Gb and several smaller fields. But it is entirely possible that these estimates were based on fairly conservative assumptions, so it might be reasonable to round the estimate up to, say, 90 Gb.

In 1985, Kuwait increased its reported Reserves from 64 Gb to 90 Gb, being probably influenced in doing so by new OPEC rules that set production quota partly on reserves. No doubt the other OPEC countries reflected on what their response should be. They were finally goaded into action when Kuwait announced a further increase to 92 Gb in 1987, when several of them evidently decided to simply match Kuwait’s number to secure a comparable production quota. In 1988 Abu Dhabi reported 92 Gb to exactly match Kuwait, (up from 31 Gb); Iran went for one better at 93 Gb (up from 49 Gb), while Saddam Hussein, not to be outdone, reported a rounded 100 Gb (up from 47 Gb). It is also worth noting in passing that about 2 Gb of Kuwait�s reserves went up in smoke in the First Gulf War.

But Saudi Arabia had a difficulty because it was already reporting much more than Kuwait, and took two more years to react before announcing a massive increase from 170 to 258 Gb in 1990. It had evidently decided to follow Kuwait’s practice of reporting Original, not Remaining Reserves. It may even have been somewhat optimistic given the exceptional character of the reservoir in its premier field, Ghawar.

Kuwait has since increased its report to 99 Gb, presumably reflecting an assumption of improved recovery.

The attached table shows the position, together with the current ASPO best estimate of total discovered, which may err on the side of optimism. Subtracting cumulative production gives remaining reserves, but the jury is still out on how good this best estimate really is. How the other OPEC countries reacted has yet to be evaluated but Venezuela did more than double its reported reserves from 25 to 56 Gb also in 1988, suggesting a connection. Future discovery is well forecasted by extrapolating the trend of past discovery, recognising particularly that the larger fields are usually found first. Realistic estimates of discovery to-date therefore have a large impact on what may be expected in the future. Very large amounts of oil are involved in these adjustments, having a corresponding impact on world reserves and indirectly the date of peak.