Is the World to See the Bottom of the Oil Drum Soon? / News / News agency Inforos
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Is the World to See the Bottom of the Oil Drum Soon?

Recently, a decision was made at an extraordinary OPEC conference in Vienna to raise oil production quotas up to 28 million barrels a day, starting from July 1. This is 500 000 barrels more than today. Nonetheless, the market reacted to this news not by a fall, but a rise in the price of the "black gold". At the end of June the quotations even exceeded 59 dollars a barrel.

Experts note that the real volumes of petroleum exports of OPEC member countries have long since surpassed their quotas. Therefore, the decision made in Vienna is rather a mere formality, and it is hardly likely to bring about a change in the situation on the world market. Today the leader in the rise of the world oil production is Iraq, where oil production rose by 51 percent over the past year. In Equatorial Guinea oil production rose by 41 percent over the year, which testifies to the growing interest in Africa's petroleum resources. Kazakhstan has doubled the growth rate of oil production.

In the meantime, oil production is falling in the USA, Norway and Great Britain. However, considering the growth of oil production in other countries, the world oil production in 2004 outstripped oil consumption in terms of growth rate by nearly a quarter. Over the year the world produced 4.5 percent more oil (80.2 million barrels a day), and consumed 3.4 percent more oil (80.7 million barrels) than over the previous year. Even the nearly 3 percent increase of oil consumption in the USA, which consumes nearly a quarter of all oil produced in the world, and the 15 percent growth of oil consumption in China do not allow the world oil consumption to outstrip the growth rate of oil production.

Incidentally, in Russia oil production is growing much faster than the growth of its prospected resources. According to the expert data of the well-known "British Petroleum" company, over the past year Russia raised the scale of oil production by 8.9 percent up to 9.3 million barrels a day. This is more than in the USA by 2 million a day and less than in Saudi Arabia, the world oil production leader, by 1.3 million. Though the growth rate of oil production nearly stopped in Russia during the first six months of this year, the overall figure for the past year (8.9 percent) looks quite impressive.

All these data confirm the analysts' estimates demonstrating that the world production of oil is sufficiently high, and the rocketing oil prices are caused by the shortage of petroleum refining facilities. Over the year petroleum refining capacity in the world grew by only 0.8 percent, which is more than four times below the oil consumption growth.

Considering that the OPEC oil production volumes are growing almost one and a half times faster than the world average, it is most unlikely that production quotas would be drastically reduced. This leads some analysts to believe that oil prices would inevitably fall sharply, while others make quite opposite forecasts.

However, experts are especially worried not by the slow growth rate of petroleum refining facilities, but by the virtually complete lack of world oil resources. Thus, over the past year the volume of the newly-prospected oil resources was equal to that of oil production. The world oil resources remained at the level of 1.188 trillion barrels, that is over the past 10 years this figure rose by only 1.7 percent.

In comparison, between 1984 and 1994 the volume of the world oil resources grew by a third. Should the present volume of oil production and prices stay, the world "black gold" resources would last for only about 40 years more. According to the pessimists' estimates, the biggest world oil reservoir – Saudi Arabia has oil resources for another 42 years, and Iran 89 years.

As for Russia, its oil resources would last for a little more than 21 years. Over the past two years this figure dropped by almost a year, which means that the increment of new resources exceeded oil production. But in Kazakhstan, with its big oil resources and relatively low production, the resources would last for another 83 years.

True, optimistic analysts urge not to dramatize the situation. They point out that the development of new advanced technologies may make oil production profitable in a number of presently uneconomic deposits, which would significantly increase the world oil resources. Besides, new oil fields may be discovered, mostly at the bottom of the world ocean or in regions difficult of access. It is also believed that mankind, failing to discover, in the foreseeable future, an alternative to petroleum as a universal energy carrier, would find ways and means to at least drastically reduce oil consumption.

True, this point of view seems to lack so far evident supremacy over the proponents of the "petroleum apocalypse" theory. Certainly, this does not mean that by 2045 all oil pumps of the world would run dry, transport come to a standstill, factories close, thousands of big cities blacked out, etc. Mankind with its powerful scientific potential would surely think of something. But it is evident now that we have to think quick. The distance to the bottom of the world oil drum is inexorably shrinking every day.
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