Peak Oil News: BP says global oil reserves growth stalled in 2004

Wednesday, June 15, 2005

BP says global oil reserves growth stalled in 2004

By Tom Bergin, European Oil and Gas Correspondent

LONDON (Reuters) - Growth in the world's oil and gas reserves stalled last year, a report from oil giant BP showed on Tuesday, bucking a trend that has historically seen new discoveries more than match production.

The BP Statistical Review of World Energy, compiled from official government figures, will reinforce concerns about the ability of global oil supplies to match surging consumption, which grew 3.4 percent in 2004.

The world had 1,188.6 billion barrels of oil reserves at the end of 2004, compared to 1,188.3 billion at the end of 2003, BP, the world's second largest oil firm by market capitalisation, said.

The 0.02 percent growth rate was the lowest since 1990 and compares with a 10-year average above 1.5 percent per annum.

Last year's almost imperceptible rise in oil reserves came despite high prices, which normally help by encouraging new exploration and by making previously uneconomic resources commercial.

Gas fared only slightly better with reserves growing 0.18 percent, but this was the lowest growth rate in over 20 years, and well below the 10-year average of more than 2 percent each year.

The figures contrast with BP's view, regularly voiced by Chief Executive John Browne, that the world is not facing a supply crunch.

However, the data echoes the oil majors' own difficulties in finding oil. Last year, the biggest international firms replaced around 70 percent of the oil and gas they pumped with new finds, analysts said.

Even BP, one of the better explorers in the industry, failed to achieve the 100 percent reserve replacement ratio that shows a firm's resource base is not shrinking.

The report also points to another worrying trend for the oil majors. The gap between their anaemic reserve replacement ratio and an effective 100 percent ratio globally supports investors' fears that the biggest oil companies will lose market share.

Analysts have predicted firms like BP and U.S. rival Exxon Mobil will become increasingly constrained in finding new exploration opportunities in the future because the biggest hydrocarbon reserves look set to be controlled by state-owned oil and gas companies in Russia, Venezuela and the Gulf states.

BP cautioned that pundits have been predicting the imminent depletion of reserves for a century and added that since different governments use different methodologies to calculate proved reserves, it is hard to draw inferences from its review, which is published annually.


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