[Eddie_lomax]

Once the production drops enough it will be Very hard to lie

But you can expect them to carry on doing so Actually many people (Stratfor, Colin Campbell etc) don't believe the official Venezualan production figures, so they can get away with it for a short while lying while production drops.

When SA and Russia drops its production though I expect we'll see the news written in big bold numbers at every petrol station :D

[Grimnir]

Here's what I was thinking of; from 1/06:
http://www.peakoil.com/fortopic16642-0-asc-0.html

The Reuters article that provoked the old thread seems to be gone now, but this new story is referring to the same claim.

[stu]

I'm really getting tired of waking up every morning, dragging myself to the keyboard, and almost every damned day getting another piece of evidence confirming the worst fears of the most pessimistic doomers.

This just sucks.

I know the feeling. Not looking good is it.

Cantarell is in decline, the Saudis are claming that their fields are in decline, Kuwaiti parlimentarians are now saying their reserves are seriously overstated, Russian production is not expected to increase beyond the end of the decade, China is peaking or is just past peak, Bush is threatening the Iranians with sanctions, the Nigerian locals are getting pissed off because the vast oil wealth is not flowing down to them, insurgents keep on attacking the oil infrastructure in Iraq, Al-Qaeda has openly stated that they are going to target oil facilities, the North Sea has been in decline for over 5 years, Venezuela is run by an anti-american socialist, oil discovery peaked way back in the 60's, petrol prices are very close to record levels, this years hurricane season in the GOM is predicted to be the same if not worse then last years as the gulf waters have not cooled enough over the winter, billions of people in Asia want the western way of life and their governments are determined to give it to them...and so on and so forth.

We really do live in interesting times.

[rockdoc123]

Although it is always tempting to start pointing fingers, pounding your chest and yelling "I told you so" to wherever cares to listen the hard facts of this whole thing are:

1. the PIW report is a claim they make without any substantiation. They did not say what kind of document they saw, how they happened to run across it, whether it was recent, who it came from and/or who it was addressed to
2. the Ministry of Energy has denied the claim
3. Now other members of the gov't are jumping in to get to the bottom of this.

Perhaps we will now find out what the internal reserves analysis says. I think there still seems to be some confusion as to what is meant by "reserves" here.....are we talking 1P, 2P or 3P? Does the 1% rule apply to what is in production or proved producing plus proved non-producing, proved plus probable, proved + probable + possible etc. There is a whole heap of difference. If the various gov't types who want to force this through get their way we might actually see third party audited reserves . Although given the issues of poor reservoir management that resulted from the Gulf War I there is likely to be a lot uncertaintly in whatever someone like D&M, Ryder Scott etc. might arrive at.

[Aaron]

RockDoc makes some excellent points...

But it's hard to ignore how nicely this dovetails with claims that every OPEC member doubled their proved reserve claims overnight in the 1980's in response to OPEC production quotas.

[stu]

1. the PIW report is a claim they make without any substantiation. They did not say what kind of document they saw, how they happened to run across it, whether it was recent, who it came from and/or who it was addressed to.

If we are to believe this then we are to believe that the PIW is the National Enquirer of trade journals. Why would they make an unsubstantiated claim?

Kuwait and oil reserves

Reuters has just ( January 20 ) delivered a second alarming message: OPEC producer Kuwait's oil reserves are only half those officially stated, according to internal Kuwaiti records seen by industry newsletter Petroleum Intelligence Weekly (PIW). "PIW learns from sources that Kuwait's actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records," the weekly PIW reported on Friday. It said that according to data circulated in Kuwait Oil Co (KOC), the upstream arm of state Kuwait Petroleum Corp, Kuwait's remaining proven and non-proven oil reserves are about 48 billion barrels. Officials from KOC were not immediately available for comment to Reuters. PIW said the official public Kuwaiti figures do not distinguish between proven, probable and possible reserves. But it said the data it had seen show that of the current remaining 48 billion barrels of proven and non-proven reserves, only about 24 billion barrels are so far fully proven -- 15 billion in its biggest oilfield Burgan.

2.The Ministry of Energy has denied the claim.

Naturally. Do you always believe OPEC leaders who make claims that they can increase production for decades to come in countries that have had seawater injection in their oil fields for 30+ years and have not discovered any major new reserves.

3. Now other members of the gov't are jumping in to get to the bottom of this.

From the same link talking about a similiar story.

The plateau in output from the Burgan field will be about 1.7 million barrels a day, rather than as much as the 2 million a day that engineers had forecast could be maintained for the rest of the field's 30 to 40 years of life, said Farouk al-Zanki, the chairman of state-owned Kuwait Oil Co. Kuwait will spend about $3 billion a year for the next three years to expand output and exports, three times the recent average.

To boost oil supplies, ``Burgan by itself won't be enough because we've exhausted that, with its production capability now much lower than what it used to be,'' al-Zanki said during an interview in his office in Ahmadi, 20 kilometers south of Kuwait City. ``We tried 2 million barrels a day, we tried 1.9 million, but 1.7 million is the optimum rate for the facilities and for economics.''

The government may not be so open as the chief of the state owned oil company.

[stu]

Just to pre-empt any responses.

Zanki denied the part about reserves being overstated but the debate here is whether or not Burgan is in decline and not the size of Kuwaits reserves though they are obviously linked.

The fact that he says Burgan is at a plateau whilst also saying the reserves are 99 billion barrels (the same figure since the 80s when it was revised upwards from 64 billion) is quite interesting.

How long is this plateau supposed to be?

[rockdoc123]

If we are to believe this then we are to believe that the PIW is the National Enquirer of trade journals. Why would they make an unsubstantiated claim?

To be honest that is exactly how their statement read to me. Reporting rumours, interpretations based on sparse information etc. is not new to the oil business, there is a whole sector of the business called Oil Scouts that operate with exactly that premise in mind. PIW is not above this....it is common practice, sometimes it ends up being true, sometimes not. I would have been looking for a statement as to what exactly the document was (an official reserves report, a memo from such and such person with such and such position in the organization etc.) before rushing to judgement.

Naturally. Do you always believe OPEC leaders who make claims that they can increase production for decades to come in countries that have had seawater injection in their oil fields for 30+ years and have not discovered any major new reserves.

No but neither do I not automatically disbelieve them, especially when I am basing that view on the reservoir engineering opinion of an investment banker. As in the case above I would try to separate fact from opinion.

The government may not be so open as the chief of the state owned oil company.

As I posted elsewhere when we discussed this same statement from Al-Zanki it seemed to me that he was speaking more to the fact that it made sense from the standpoint of best reservoir management perspective to produce at the lower rates. Wood Mackenzie agrees with this viewpoint stating that the Kuwaitis had been using Burgan as a swing producer , when they had problems in other fields which required short term shutin they cranked up Burgan to meet their Opec quota. This resulted in some problems with gas and water coning in some areas of the field....lowered controlled production rates seem to alleviate those issues. WoodMac assess a conservative reserve figure for Burgan of 45 GB but note that ther might be as much as 75 GB if technical reserves (those requiring substantial additional investment) are pursued. There are still plans for further development in Burgan, BP and Chevron were at one time pursuing this option although the Kuwaitis have been reluctant to open up the oil fields to foreign investment.

[bobbyboy]

Having worked at a number of companies over the years I am used to seeing internal memos that claim all sorts of reserve numbers. The only one I pay attention to is the one signed off by the reserve audit committee. Perhaps that's what they saw...perhaps not.
Bad news if it is, non-event if it isn't.

Other Kuwait thread

Bad news it is then

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

Bunch of jokers they are

Some quotes to wet your appetite:

“There are many definitions and categories for proven reserves which are not being adhered to and as a consequence governments are throwing together proven, probable, potential, speculative and conceptual,” a senior Gulf oil executive says.

Got to love those conceptual reserves!

Mindful of the fact that Greater Burgan has been in production for over 50 years and is approaching maturity, KOC has tried to ease the strain on the reservoirs by holding back production.

“The second half is not as easy to recover or produce as the first, as fields run deeper into depletion and the uncertainty in the balance of reserves increases.”

Burgan shares similar characteristics with Saudi Arabia’s huge Safaniya field: a series of multiple reservoirs, it is made up of two basic parts; one is a prolific sand zone where up to 50% of the oil is produced, with the remainder made up of a multitude of thinner, harder-to-produce layers, where many more wells need to be drilled.

Project Kuwait also faces some opposition among Kuwaiti oil industry officials, who believe the best way forward is to keep production at the northern fields on an even keel rather than run the risk of damaging the reservoirs through higher production.

Those MPs bunch of doomers I tell you

And what is the rationale for claiming the reserve growth numbers mean they are overstated? That's a pretty big claim without any documentation

Other Kuwait thread
Here is a table from the "Reserves Categorization Project"- the official title of the report. Note this was planned in 2001; they are masters at smoothing (or should that be covering up depletion):

The fact that the CEO of Kuwait NOC seemed surprised and confused with the question suggests to me that this is something out of left field. If indeed it was something that Kuwait new about and was trying to hide I would have thought he would have his banter down pat. He is not an uneducated, stupid man...I would suspect he knows what is going on in his own company

Other Kuwait thread
Nah couldn't be lying through his teeth could he

Again this is speculation based on PFC Energy saying they saw a report....they do not divulge what kind of report it is, who signed it, who commissioned it etc. The CEO of Kufpec when confronted with the PFC news was confused and did not know what they were talking about....recently the Kuwaiti petroleum minister has said their reserve numbers are correct.
Again rumour and inuendo.......I like to stick to facts or information I can put my fingers on. Currently what we have are reserve and production numbers released by national oil companies....it would be nice to have the raw data on the various fields but that is not forthcoming.

Another thread

If you want to point me to the paper where either the Kuwait government or Kufpec state "yes Burgan is in serious decline, we have produced more than half the reserves etc" then please do so

Yet another thread
Here you go:

Although it is always tempting to start pointing fingers, pounding your chest and yelling "I told you so" to wherever cares to listen the hard facts of this whole thing are:

1. the PIW report is a claim they make without any substantiation. They did not say what kind of document they saw, how they happened to run across it, whether it was recent, who it came from and/or who it was addressed to
2. the Ministry of Energy has denied the claim
3. Now other members of the gov't are jumping in to get to the bottom of this.

Yeah rock hard they are

To be honest that is exactly how their statement read to me. Reporting rumours, interpretations based on sparse information

Nothing to see here folks its just rumours; must have taken them ages to come up with such precise reserve figures

I would have been looking for a statement as to what exactly the document was (an official reserves report, a memo from such and such person with such and such position in the organization etc.) before rushing to judgement.

You must have somehow inadvertently skipped pages 6 & 7 of the January 30th 2006 edition

[rockdoc123]

You must have somehow inadvertently skipped pages 6 & 7 of the January 30th 2006 edition

In fact I did..the thread you referenced was started following the PIW release in their January 23rd issue where they did not provide the details. That was the article I was refering to.

Thanks for the more detailed info from the later report.


In comparison WoodMac notes 60 GB of original 2P reserves with remaining 32 GB this being what they refer to as a conservative view ...only reserves currently producing or for which there are clear plans currently to develope. IHS Energy on the other hand note that in 2001 reserves were 86,530 MMB as compared to 86,680 MMB in 2004 with remaining reserves of 52,326 MMB in 2004 having decreased from 54,506 GB in 2001.

There are obviously questions as to what the reserves truly are and how the categories fall out. Perhaps we will find out more concrete information this week when according to PIW Kuwait will release an official report:

KUWAIT -- Energy minister Sheikh Ahmad al-Fahd al-Sabah has said that Kuwait Oil Co. (KOC) is in the final stages of drafting a document showing that the country's oil reserves are much higher than stated in a 2001 internal report. KOC and the ministry have been under pressure from the Kuwaiti parliament to come clean on the reserves issue since January, when PIW published an internal KOC report from 2001 stating that the country's remaining reserves were much lower -- at around 48 billion bbl -- than the official figure of 100 billion bbl . "KOC is preparing a whole document to answer all the questions regarding the reserves," Sheikh Ahmad said. The minister confirmed that the internal report published by PIW was authentic, adding: "The information contained in it is right, but it does not reflect the whole picture." Sheikh Ahmad has previously said that the published report did not include 74 reservoirs that have not been developed

[clv101]

This is interesting:

MPs call for cap on oil production
Five lawmakers yesterday filed a draft law calling on the government to limit oil production in line with actual proven reserves, which have been claimed to be lower than the officially stated figure of 100 billion barrels. The four-article bill stipulates that the new production figure should not exceed the percentage of actual output in the past two fiscal years divided by proven reserves.
http://www.kuwaittimes.net/Navariednews ... 2126964756

Remarkably similar to one of the key points of the depletion protocol:

THE DEPLETION PROTOCOL

WHEREAS the passage of history has recorded an increasing pace of change, such that the demand for energy has grown rapidly in parallel with the world population over the past two hundred years since the Industrial Revolution;

WHEREAS the energy supply required by the population has come mainly from coal and petroleum, having been formed but rarely in the geological past, such resources being inevitably subject to depletion;

WHEREAS oil provides ninety percent of transport fuel, essential to trade, and plays a critical role in agriculture, needed to feed an expanding population;

WHEREAS oil is unevenly distributed on the Planet for well-understood geological reasons, with much being concentrated in five countries, bordering the Persian Gulf;

WHEREAS all the major productive provinces of the World have been identified with the help of advanced technology and growing geological knowledge, it being now evident that discovery reached a peak in the 1960s, despite technological progress, and a diligent search;

WHEREAS the past peak of discovery inevitably leads to a corresponding peak in production during the early years of the 21st Century, assuming no radical decline in demand;

WHEREAS the onset of the decline of this critical resource affects all aspects of modern life, such having grave political and geopolitical implications;

WHEREAS it is expedient to plan an orderly transition to the new World environment of reduced energy supply, making early provisions to avoid the waste of energy, stimulate the entry of substitute energies, and extend the life of the remaining oil;

WHEREAS it is desirable to meet the challenges so arising in a co-operative and equitable manner, such to address related climate change concerns, economic and financial stability and the threats of conflicts for access to critical resources.
NOW IT IS PROPOSED THAT

1. A Convention of Nations shall be called to consider the issue with a view to agreeing an Accord with the following objectives:

• 1. to avoid profiteering from shortage, such that World oil prices may remain in reasonable relationship with production cost;
  
• 2. to allow poor countries to afford their imports;
  
• 3. to avoid destabilising financial flows arising from excessive oil prices;
  
• 4. to encourage consumers to avoid waste;
  
• 5. to stimulate the development of alternative energies.

2. Such an Accord shall have the following outline provisions:

• 1. No country shall produce oil at above its current Depletion Rate, such being defined as annual production as a percentage of the estimated amount left to produce;
  
• 2. Each importing country shall reduce its imports to match the current World Depletion Rate, deducting any indigenous production.

3. Detailed provisions shall cover the definition of the several categories of oil, exemptions and qualifications, and the scientific procedures for the estimation of Depletion Rate.
4. The signatory countries shall cooperate in providing information on their reserves, allowing full technical audit, such that the Depletion Rate may be accurately determined.
5. The signatory countries shall have the right to appeal their assessed Depletion Rate in the event of changed circumstances.
http://www.peakoil.ie/protocol

Also see: Kuwaiti Reserve Reverse from the original January discussion.

[Sleepybag]

The Kuwait opposition, 33 out of 50 seats in parliament, wants to keep oil production at a maximum of about one percent of their reserves. However, the reserves themselves were inflated in the 1980's quota wars. Various sources claim that Kuwait's reserves are far below the 99 billion barrels. Depending on the source, the estimates range from 24 to 48 billion barrels of oil (PIW). The opposition leader wants his government to give a real figure on the current 'proven' reserves, to base the production quotum. If the Kuwait government has to lower their oil production rate, then exports will halve, in physical terms.

Read the full article here: Opposition demands ‘true’ reserve figures in Kuwait

Based on official reserve figures this would freeze Kuwait’s production at 2.5 million barrels per day (bpd), scuppering its plans for a massive production increase.

But if lower, more conservative figures are taken into account—as some opposition leaders want to—then Kuwait would have to halve its current production, which would drive world prices higher.

[whereagles]

hum... I would say it is as important as the power that the opposition has to actually change things.

We all know changing things is a very, very, VERY complicated thing

[PWALPOCO]

Well , I dont see anyone commenting on the latest developments from Kuwait so heres the link for discussion: Opposition demands ‘true’ reserve figures in Kuwait

Question time for those in the know .......
1) are production quotas in OPEC given in proportion to reserve size ?

2)What happens if Kuwait revises down her reserves with regards to market reaction , OPEC status etc

3) If Kuwait reserves are downgraded , by say half , who has to find how much extra to keep total OPEC output up, assuming the shortfall is distributed proportionally amongst OPEC members ?

4) Is there likely to be a chain reaction of "reserves honesty" amongst other OPEC members?

5) Is there likely to be a chain reaction of "preserve the wealth" amongst other OPEC members?

[GreyZone]

http://news.yahoo.com/s/afp/20060622/wl ... 0622124022

Gee, this issue now is being debated in the Kuwaiti parliament as they consider a suggestion to limit annual production, in order to maximize the life of the remaining reserves.

But hey, since it hasn't been taken up on Fox News it must not be important, right Flow? Flow? You there, Flow?

[NTBKtrader]

Ten members of the Kuwaiti National Assembly last week tabled a motion to link Kuwait's crude oil production with its oil reserve. After it is passed by parliament it will become a law under which the Ministry of Energy and the oil sector will operate.

The motion comes from National Assembly members seven months after a report published by the 'Petroleum Intelligence Weekly', which is a prestigious and internationally acclaimed specialized magazine. The bulletin stated that the actual volume of oil reserve is about 24 billion barrels and it is almost the same volume of the potential reserve. This means that the total reserve stands at about 50 billion barrels, and that the oil industry will last another 25 years or more according to the production capacity of the oil reserve, which is not yet finally defined.

Other sources of information, such as the Organization of the Petroleum Exporting Countries (OPEC), the International Atomic Energy Agency (IAEA) and specialized publications all indicate that the Kuwaiti reserve ranges between 85 and 102 billion barrels of actual and potential crude oil.

Link

[NEOPO]

Almost as if it is a positive thing to have 50 BB instead of the ASS U ME D 100 BB.

Let us hope that the real figures for countries such as Saudi Arabia are not closer to 50% of reported reserves or less......
Canary in the mineshaft if you ask me.

[rockdoc123]

I think I posted this previously but WoodMac suggest Kuwaits 2P ultimate reserves to be around 45 MMB (pretty close to the number suggested here?). They believe there is quite a bit of "technical" reserves remaining (P3) but they give them no credit until there are projects announced adn capital allocated that can recover those volumes (this might account for the 80 GB number hanging around). An age old problem of assessing reserves reported is what exactly are the qualifications....proved producing, proved, proved behind pipe, proved developed, proved undeveloped, probable, possible etc. There are standards for these definitions but when someone says we have X reserves it is pretty difficult to know for sure what number they are referring to. It never helps when the information is filtered through the press who have absolutely no idea of the various definitions.