According to the Paris based French Oil Institute (IFP), the OPEC’s surplus (spare capacity) fell to about one billion barrels a day in the spring of 2004, from 4.6 billion barrels a day in 2002. This is a “crude reality,” many argue and not wrongly so.
While the available spare capacity is running low, the International Energy Agency (IEA) set up by the industrialized countries some 30 years back in the immediate aftermath of the 1973 oil price rise, predicts that the global oil demand would rise by another 1.8 million barrels day to touch the 84 million barrels a day mark by the next year — 2005.
Some of the new statistics put forward in the market indicate that oil production in 18 producing countries has passed its peak and is declining faster than previously thought: About 1.14 million barrels a day.
The British trade journal Petroleum Review has reviewed the 2003 Statistical Review of World Energy, put together by British Petroleum, to look for signs of depletion. The first country to start to decline was the United States. The UK was also not far behind. The UK expanded production each year until 1999, experts confirm. “Since then it has gone down every year by 5 percent, then 6 percent then 8 percent and this year it looks set to be higher. This is even with the best technologies and techniques available.” The country with the biggest rate of decline is Gabon. The impoverished West African state experienced an 18 percent drop in production year on year. Of course these are the most obvious examples of depletion. According to other reports some Gulf producers, such as Kuwait, are already producing at their maximum. Besides the 18 in decline, most of the other producers have no more room to expand production.
There are four oil fields in the world which produce over one million barrels per day. The Ghawar oil field of Saudi Arabia is the biggest of all these, producing roughly 4.5 million to 5 million barrels a day. Besides Cantrell in Mexico produces 2 million barrels per day, Burgan in Kuwait produces 1 million barrels per day and DA Qing in China produces 1 million barrels a day. In recent months people like Simmons & Co. have raised questions about Ghawar’s capacity to continue producing at this level. The field was brought on line in 1951. By 1981 it was producing 5.7 million bpd. Its production was restricted during the 80s. However, with the addition of two areas in the southern part of Ghawar - Hawiyah and Haradh - the production went back above 5 million barrels per day. In 2001 it was producing around 4.5 million bpd. According to estimates some 3400 wells have been drilled into this gigantic reservoir.
The scramble for oil thus continues. As soon as the US eased sanctions on dealings with Libya, US majors Chevron Texaco and ExxonMobil expressed renewed interest in the Libyan concessions. Libya’s National Oil Corporation has recently put 15 onshore and offshore areas on the auction block.
In the meantime, the Russians are also out to assure their buyers that, despite the ongoing Yukos saga, they would continue to play their role in the energy markets. President Putin himself assured US President Bush on that account, during a 16-minute telephone call, it was reported last week.
Similarly Russia has also assured China, the world’s second largest crude consumer, that there will be no disruptions in Russian oil supplies to China. Russian Prime Minister Mikhail Fradkov assured China that there were no grounds to anticipate any emergency; the supplies will be stable.
Yukos has a monopoly on providing Russian oil to China. It has a 6-9 percent share in China’s overall crude imports. The interest of Chinese companies in Russian oil is so high that they are ready to fund rail transit for it across Russia, the newspaper reported. India is also expected to raise the issue of OPEC countries charging a premium on crude oil it sells to developing countries at the oil organization’s ministerial meeting in Vienna next month, the Indian Petroleum Minister Mani Shankar Aiyar said last week.
