LONDON: The world's store of oil and gas jumped 8.3 percent last year, as exploration rose and record crude prices made marginal projects commercially viable, yet supplies will struggle to meet demand due to political factors, oil giant BP said yesterday.
BP said in its annual calculation of global oil and gas reserves — considered the industry's most comprehensive — that oil reserves totaled 1,653 billion barrels at the end of 2011.
The world had 1,526 billion barrels of extractable oil in the ground at the end of 2010, BP said last year in its Statistical Review of World Energy.
"One perennial question is whether there are enough energy resources for our needs?" Chief Executive Bob Dudley said as he unveiled the report.
"The answer from this review is certainly 'yes': At today's consumption rates, the world has proved reserves sufficient to meet current production for 54 years for oil," he added.
The report — based on governments' official reserves statistics, including those challenged by analysts — also showed that gas reserves rose over 11 percent in 2011.
Dudley said oil companies were currently finding it easier to secure new exploration and production opportunities than a decade ago, partly because new technologies made more projects viable.
Higher oil prices have allowed resources previously known to exist, such as Canada's oil sands and certain deepwater projects, but which were previously deemed uneconomic to produce, to be profitably extracted, and therefore suitable for entry in the calculations.
Also, higher oil prices have spurred exploration, leading to new finds. Brent oil prices were on average 40 percent higher than in 2010 and exceeded $100 a barrel for the first time ever. At $111.26 per barrel, they were the second-highest in inflation adjusted terms, behind only 1864, BP said.
However, the reserves upgrades are not significantly impacted by shale gas and oil finds, BP said.
Though shale gas and oil have led to a turnaround in US oil and gas production, BP Chief Economist Christophe Ruhl said it would take time to say confidently how large the resource base was.
BP's optimistic outlook comes as OPEC countries met in Vienna to discuss possible production cuts to stem recent crude price falls.
Yet the current price weakness and the abundant oil reserves did not mean an easy outlook for consumers, Ruhl said.
Despite the increase in opportunities for Western oil companies to invest in new projects, most oil reserves remain in the hands of state-backed oil companies whose investments follow political mood swings rather than economic signals.
Hence, fields may remain undeveloped while demand goes unsatisfied.
"The world faces challenges in growing supply rapidly enough to sustain growth in energy demand and the economy," Ruhl said.
Dudley declined to comment on BP's plans to sell its Russian joint venture TNK-BP, or a report that BP was moving closer to a deal to settle litigation with the US Department of Justice around its Gulf of Mexico oil spill.
World oil & gas reserves rise 8.3 %
