Extract from Energy Intelligence Weekly
Oil Reserves Accounting: The Case Of Kuwait
Monday, January 30, 2006
Last week PIW ran a story that raised questions about the actual level of proven oil reserves in Kuwait, based on data contained in an end-2001 report on the country’s reserves from Kuwait Oil Co. (KOC). This follow-up supplement lays out the key data shown in the report in the context of the wider debate over the accuracy of reserves reporting across the oil industry. The Kuwaiti numbers vary so strikingly from those in the public domain that they could fundamentally alter many of the basic operating assumptions about the status of world oil reserves. At the very least, they highlight the need for much greater transparency and clarification, particularly in the Mideast Gulf states which are being looked to as the main source of future global capacity increases.
Now, adding fuel to the debate, Kuwaiti oil company documents have emerged that refer to crude oil reserve levels which do not tally with Kuwait’s official claim to possess proven reserves of around 100 billion barrels — or around 8.3% of the global total. This raises fresh questions over the reliability of the reserves data for a key Opec producer, and the extent of the reserves themselves. The data in a 23-page dossier obtained by PIW, which was produced at the end of 2001 by state-owned Kuwait Oil Co. (KOC) and based on the findings of its reserves management committee, offer a unique insight into the true condition of the country’s reserves.
The most striking statistic in the report is that as of March 2001, Kuwait’s remaining oil reserves stood at just 48 billion bbl. The total includes the whole of Kuwait plus its share of the Neutral Zone shared with Saudi Arabia, which is referred to in Kuwait as the Divided Zone (DZ). These barrels are split roughly 50-50 between “proven” reserves — those with a 90% certainty of being produced — and “nonproven,” which is assumed to be a combination of probable and potential. The total figure is more than 50% lower than Kuwait’s official proven reserves of 101.5 billion bbl, which are cited by Opec in its statistical bulletin for 2004. According to the US Energy Information Administration (EIA), Kuwait’s proven reserves have since been updated to 104 billion bbl, including the share of the DZ.