Something Fishy about OPEC

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Something Fishy about OPEC

Posted Jul 25, 2008 by Richard Heinberg

This morning as I was making my usual rounds of my favorite online news and commentary sites, I saw this from Ron Patterson over on The Oil Drum:

[OPEC] countries with 939,016 billion barrels of [official oil] reserves (78% of [the world’s] total), are producing every barrel they can and still only producing 45% of the world's oil. This while [the non-OPEC] countries with 264,920 billion barrels (22% of total) of reserves are producing 55% of the world's oil. Or, to put in into percentages, OPEC nations are producing 1.25% of their remaining reserves each year while non-OPEC nations are producing 5.63% of their remaining reserves each year. Or wording it differently, non-OPEC nations are going through their remaining reserves at 4.5 times the rate OPEC nations are going through theirs.

This evidence may not hold up in a court of law, or even in the court of pubic opinion, but for those of us who have been following world oil production closely for a few years it is pretty damningly suggestive that OPEC’s reserves are indeed wildly inflated, as Colin Campbell and Jean Laherrère have been saying for at least a decade now, and as Matt Simmons argued persuasively in his book/ Twilight in the Desert/. The maintenance of a sufficiency of world production is mostly in the hands of OPEC and especially the Saudis, and when discussion turns to their capacity to continue meeting demand we have only their word for it.

Ron also reports on a discussion last night with with a well-connected Saudi (unnamed, of course), who says that in recent years ARAMCO has hired hundreds of petroleum engineers from Venezuela (ones whom Chavez fired) and that ARAMCO is poking holes all over the country—drilling every field they have at the maximum rate. Ron’s opinion, which sounds pretty well-supported to me, is that the Saudis are getting desperate: they may be able to maintain flow rates for another couple of years or so, but after that it’s all downhill fast.

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