2067: The end of the oil age


The fear of losing a market share makes the oil countries play the oil price wars, glut the market while the low prices reducing investments in the new oil reserves exploration for the second year. The world proved oil reserves increased by only 2.5 times up to 1.7 trillion barrels during active crude oil production for the past 35 years.

It seems that the major crude oil producing countries, which are so keen on a price war, forgot that in reality the oil runs out very quickly. For better understanding: 1.7 trillion barrels of oil with a production of 90 million barrels per day are approximately as the Indian Ocean from which two Gulfs of Mexico are scooped out every year. According to the simplest calculations, it seems the current world’s oil proved reserves at a current production level will suffice for 50 years. By that time it will be possible to find industrial raw commodity to replace the oil in the cycle of production of goods, find and widely implement a cost-effective energy analogue. But in reality it is not so smooth.

The annual production of each further oil barrel becomes more expensive, it is technically becomes more difficult to produce and refine heavy oil, the new proved reserves are exploring more and more slowly. A fabulous figure – $40 trillion investments will be required during the next 20 years to compensate for falling oil production at the existing fields and develop new ones to meet the growing oil demand.

Although it is fairly clear that proved oil reserves cannot be evaluated in real time, the situation is as follows: the world’s proved oil reserves have been increasing from a minimum of 0.02 percent up to 13 percent annually for the last 35 years. During that period, the reserves have dropped only twice – in 1998 and in 2015. The volume of reserves decreased by 0.1 percent or 2.4 billion barrels in 2015 as compared to 2014 and stood at 1.697 trillion barrels. It was a result of the decrease in estimations in nine countries – Brazil, Colombia, Trinidad and Tobago, Denmark, Italy, Russia, Saudi Arabia, Egypt and Indonesia. In total, the volume of proved reserves of these oil producing countries has decreased by 5 billion barrels of oil. The decrease was slightly offset by the growth of reserves of other countries, including Norway and Oman at the yearend.

Taking into account the data in the BP Statistical Review of World Energy-2016, one can assume that the oil era will end in 2067. Naturally, these simple calculations are based on current proved reserves and the level of crude production. Any economic model of world institutions which try to predict the economy situation for 30-50 years ahead, shows that energy consumption will only grow steadily. For example, BP believes that the energy consumption will grow by a third after 20 years as a result of the growth of world GDP and population (by 1.5 billion people). Thus the demand for oil will increase up to 122 million barrels per day by 2040 and the oil price will reach $204 per barrel, EIA believes. BP assumes that some 80 percent of the world energy demand will be covered by oil, gas and coal, while the EIA thinks the remaining 20 percent of this demand will be covered by nuclear and renewable energy. By the way, the alternative energy is still in its infancy, therefore, it will be able to free only one million barrels of oil per day from the electricity production industry only after 25 years.

Assumptions about the significant increase in oil prices in the long run period are caused by reduction in the number of exporting countries while the energy demand is growing. Too cheap oil will hinder the development of the world economy and will not allow fully ensuring the energy security of the nations. The world population will be nine billion by 2040 and everybody will need work, car, food, heat and inexpensive Wi-Fi. As more than 60 percent of people will live in cities. For obvious reasons, in cities people more often use cars, number of which will reach 2.6 billion by 2040, according to OPEC. A major part of the population’s growth and the consumption of world resources will be accounted for developing countries. For example, after 10-15 years India will be overpopulated than China.

Certainly, alternative energy will slightly reduce fossil fuel production for the medium-term period. Of course, there will be discovered a few more fields with large recoverable oil that will be able to meet the growing demand for some time. Gas rational use will be expanded; gas will be produced in the Arctic, where gas reserves are estimated at 1,500 trillion cubic meters.

Basic but the current scenario of oil resource availability of producing countries is shown in the table below:

Country Proved oil reserves (billion barrels) Oil production (in thousands of barrels per day) Resource availability

(in years)

US 55 12704 12
Canada 172.2 4385 107
Mexico 10.8 2588 11
Argentina 2.4 637 10
Brazil 13 2527 14
Colombia 2.3 1008 6
Ecuador 8 543 40
Peru 1.4 113 34
Trinidad & Tobago 0.7 110 14
Venezuela 300.9 2626 314
Azerbaijan 7 841 23
Denmark 0.6 158 10
Italy 0.6 115 14
Kazakhstan 30 1669 49
Norway 8 1948 11
Romania 0.6 84 19
Russia 102.4 10980 25
Turkmenistan 0.6 261 6
United Kingdom 2.8 965 8
Uzbekistan 0.6 64 25
Iran 157.8 3920 110
Iraq 143.1 4031 97
Kuwait 101.5 3096 90
Oman 5.3 952 15
Qatar 25.7 1898 37
Saudi Arabia 266.6 12014 61
Syria 2.5 27 253
United Arab Emirates 97.8 3902 69
Yemen 3 47 175
Algeria 12.2 1586 21
Angola 12.7 1826 19
Chad 1.5 78 53
Congo 1.6 277 16
Egypt 3.5 723 13
Equatorial Guinea 1.1 289 10
Gabon 2 233 23
Libya 48.4 432 307
Nigeria 37.1 2352 43
South Sudan 3.5 148 65
Sudan 1.5 105 39
Tunisia 0.4 63 17
Australia 4.0 385 28
Brunei 1.1 127 24
China 18.5 4309 12
India 5.7 876 18
Indonesia 3.6 825 12
Malaysia 3.6 693 14
Thailand 0.4 477 2
Vietnam 4.4 362 33
Total 1697.6 91670 51
Raw data: BP Statistical Review of World Energy-2016

Article written by HEI contributor Vagif Sharifov, Editor-in-Chief, TREND News Agency.

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