Supply and price unease remain despite growth in global crude oil reserves

Global oil reserves grew by more than 8 percent in 2011, owing to increases in oil exploration activities for the year. High crude oil prices helped marginal projects  generate profits, also prompting reserves to go up. However, despite this growth, BP disclosed that political issues will continuously challenge suppliers to sustain oil supply.

BP also said that total oil reserves, in barrels, increased from 1,526 billion in 2010 to 1,653 billion by 2011. Yearly, BP issues a Statistical Review of World Energy, an in-depth and complete report that is highly regarded by the oil industry.

Bob Dudley, BP Chief Executive, said that one of the industry’s continuing concerns is sufficiency of oil resources vis-a-vis global demand. But he gave assurance that oil reserves would be enough to sustain present production for more than 50 years.

Gas reserves, on the other hand also grew by 11 percent by year-end 2011.

Dudley indicated that, due to technological advancements, oil exploration and production ventures have been more profitable now than they were a couple of years ago.

He also disclosed that this year’s reserve calculations and statistics included Canadian oil sands. In the past, these were not considered as viable energy resources but, today, extracting and refining oil sands as another energy source has become lucrative and thus worthy of inclusion in oil reserve statastics.

In addition, high current crude oil prices had stimulated the energy sector to discover more alternative energy sources. Brent crude prices were higher by 40 percent compared with prices back in 2010 and had gone up beyond $100 per barrel.

Meanwhile, Shale gas did not have any strong impact on reserve calculations as in the case of oil sands.  While it is true that shale gas has helped improve energy production in the U.S., BP could not, at the moment, ascertain the potential of shale as a steady resource according to Christophe Ruhl, Chief Economist at BP.

BP’s positive outlook springs from recent talks among OPEC members in Vienna, where oil production cuts are being considered to stop current oil prices from sliding further.

However, weak crude oil price per barrel amid sufficient reserves of oil aren’t as optimistic a scenario as they might  seem, especially for a majority of consumers.

Ruhl reminded that the bulk of global oil reserves are held by government-controlled oil firms whose investment appetites are swayed by political affairs rather than economic indicators. Thus, exploration of oil-rich fields may someday soon be deferred, even if there’s apparent demand that has to be met.

According to Ruhl, “The world faces challenges in growing supply rapidly enough to sustain growth in energy demand and the economy.”