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How Much Oil is Left in the World?


Over the next two to three weeks, I am going to post a series of short articles utilizing graphics I created from the recently released 2012 BP Statistical Review of World Energy. Because I am working on the roll-out of a new product which will be geared specifically toward those with a financial interest in the world of energy (more on that in the coming days), I will take a break from my video blogs during this time, and catch up on accumulated questions after I finish this series.

World Oil Reserves Facts and Figures

The topic of this first article in the series is oil reserves. Just to review, an oil resource refers to the total amount of oil in place, most of which can’t be recovered. The proved oil reserve refers to the amount of oil that can be recovered economically with existing technology. More details can be found in Setting the Record Straight on U.S. Oil Reserves.

The first graph shows that despite the growth in oil production over the years, reserves continue to grow.

Over the past 30 years, 90% of the reserves additions have come from OPEC countries.  However, many feel that OPEC reserves are overstated. The following excerpt is from my book Power Plays, which explains the controversy over OPEC reserves growth in the early 1980′s:

In 1982, OPEC introduced a system of production quotas based partly on the oil reserves in each country. Shortly after, a number of OPEC countries raised their reserves estimates sharply, as a larger reserve would increase their production quota. In 1983, Kuwait increased its reserves by nearly 40%, from 67 billion barrels to 93 billion barrels, and Iran added 34 billion barrels to its reserves. In 1984, Venezuela increased its reserves by nearly 100%, from 28 billion barrels to 55 billion barrels. In 1985, the UAE nearly tripled its reserves from 33 billion barrels to 97 billion barrels. In 1988, Saudi Arabia raised its reported reserve number by 85 million barrels over the previous year.

Over the decade of the 1980s, OPEC’s stated reserves increased from 425 billion barrels of oil in 1980 to 763 billion barrels by 1990—an increase twice the size of Saudi Arabia’s entire estimated oil reserves in 1982 . By 2010, OPEC’s stated reserves had further grown to 1.1 trillion barrels of oil and accounted for 90% of the global oil reserve additions of the previous 30 years.

So reserves growth in the early 1980′s was primarily due to OPEC countries restating reserves, which many believe to have been motivated by OPEC’s quota system. The sharp uptick in 1999 was a result of a large block of Canada’s oil sands being moved from the resource category into the reserve category.

Finally, reserves growth over the past five years has been primarily a result of Venezuela moving some of their heavy oil sands into the reserve category. Venezuela increased their stated reserves from 99 billion barrels in 2007 to nearly 300 billion barrels in 2011, and this accounts for 80% of global reserves growth during that period of time. Some, including me, would question whether those resources should have been placed in the reserves category, as there are significant questions about Venezuela’s ability to develop them.

Mystery of the Self-Replenishing Reserves

The next graphic shows the history of proved reserves in the U.S. over the past 31 years, and it tells an interesting tale:

In 1980, U.S. proved reserves were 36.5 billion barrels. In 2011, U.S. proved reserves were 30.9 billion barrels. Over the course of 31 years, the U.S. produced 103 billion barrels of oil, but U.S. reserves only fell by 5.7 billion barrels. This is a result of continued improvements in oil extraction technology (e.g., hydraulic fracturing) as well as from new discoveries (especially offshore). But it also demonstrates that one must allow for reserves growth when looking at a country’s proved reserves. I think it’s a safe bet that even though U.S. proved reserves are 30.9 billion barrels, a lot more oil than that will ultimately be produced in the U.S.

U.S. Reserves Just a Blip on the Radar

The final graphic, however, puts U.S. reserves in perspective. Relative to global reserves, U.S. reserves are minuscule (the tiny red line at the bottom which you may have missed), and declining as a percentage of global reserves. To the extent that global reserves growth is real — again predominantly in OPEC countries — this forewarns of a shifting of economic and political power from those who are dependent on oil to those who control it.

In the next article, I will discuss global oil production trends.

Image Credit: Norebbo/Shutterstock


Robert Rapier's picture

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Bill Lee's picture
Bill Lee on Jun 23, 2012

Not sure the info in this article about oil reserves is correct. Shale oil has raised the amount in a big way. Also it has been proved some people don’t like oil as energy and tend to downgrade reserves. The Canada reserves are more than what is in the Middle East. That is why we should get a good safe route for the Keystone Pipeline with this and Off shore drilling for oil we will be able to stop using Middle East oil. 

AS far as global warming there is some evidence the ice caps at the poles are growing. Also there is evidence that the earth was warmer some 1,500 years ago.

Raoul LeBlanc's picture
Raoul LeBlanc on Jun 23, 2012

I read your articles often and find most of them, including this one, to be insightful. But I would disagree with the notithat the end of the article about an inevitable power shift.  This views the buyer as somehow more beholden in the relationship than the seller. This is the classic energysecurity argument, but I have never found it convincing.  Power shifts in a market depending on whether the good is scarce or abundant, but both buyer and seller get something from the deal. Countrwith that receive more than 90 percent of their revenues from oil (most OPEC countries) are just as “dependent” as big consumers.  

Robert Rapier's picture
Robert Rapier on Jun 23, 2012

The Canada reserves are more than what is in the Middle East.


No. The resource may be, but not the reserve. And shale oil has raised reserves, but in the Bakken for instance only 1-3% of that resource is currently classified as reserve because that’s all we know how to currently extract economically. If oil prices fell to $50 or so for the next year, you would see reserves plummet as a lot of oil would not be economically viable.


Raoul LeBlanc's picture
Raoul LeBlanc on Jun 23, 2012

Good conversation.  I would agree that oil is vital and no good replacement can be found.  Nothing has the sameenergy density and versatility as oil. 

However, oil has been vital for decades.  It was just as vital to the OECD countries from 1986 to 2000, when prices were quite low.  

I think the power in a market relationship has to do with whether we are in a buyers market or a sellers market.  In turn, this depends on the supply demand balance prevailing.   Over the past decade, the balance has been tight, with the exception of 2008-2009, when OPEC made fairly effective cuts.  But this is really a supply access and investment story.  Demand from the developing world has been strong for decades.  In fact, demand from Asia grew faster in both absolute and percentage terms from 1990-97 than it did from 2000-07.  But access has been cut off from the best basins since 2002, forcing the world to higher cost barrels.

I also do not think that demand is so insensitive to price.  It simply takes a long time.  


As forRussia and gas, three observations: first, as a percentage, Russian gas not grown in European supply for the past decade.  Second, in 2010, European utilities bargaining power rose substantially vis a vis Gasprom.  The Europeans were able to demand more spot volumes and some priterms improvement. Gasprom stuck to its guns and largely prevailed, but the power did shift.  That said, I actually think your point on russia-europe gas has a lot of validity. In a pipeline relationship, power politics is much more prominent than in a fungible market relationship such as persists in the oil market

Jesse Parent's picture
Jesse Parent on Jun 29, 2012

I agree strongly with both points. I before I saw the comment chain, I was going to quote this:

“To the extent that global reserves growth is real — again predominantly in OPEC countries — this forewarns of a shifting of economic and political power from those who are dependent on oil to those who control it.”

and say — exactly. This is a significant factor in US energy security and global energy security and related oil/energy markets. There is a major shift taking place in this way — and as elsewhere in the comments, even though there are vast ‘resources’ of Canadian oil, how much a reserve it is (and thereby how much a boon to the US in terms of a North American import option), is very much in question – particualrly in regard to the refining capacities and infrastructure within the US.

The simple but at times ‘easily’ overlooked reality that the global demand for oil — particularly the same kind of cheap, clean, “Sweet and light” oil that has essentially built the 20th century in terms of development — is growing, and the assumption is that it will be there to meet these expectations. But the problem is that it isn’t – the oil is heavier and more sour, more difficult to extract, transport (in some cases) and refine. This is all happening as oil, the ever-valuable fuel – is more and more demand as many parts of the world (China, India, especially) are developing.

There is going to be absolutely no shortage of demand, that’s for sure.


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