As Western Wells Dry Middle East Gulf States Will Be Pumping 30 Million BPD Through 2020

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). It is prediction season again for global energy resource reserves with some doomsayers saying that oil reserves will definitely begin to run out in 2020 and other industry seers hedging their bets with qualifications on energy consumption patterns and new fossil fuel replacement technologies. Predictions on gas reserves seem pretty open ended and are constantly being revised relative to new discoveries of gas fields. Some gas market supply chain and pricing confusion is keeping consultants and other rocket scientists in work announcing gas as 'the energy source of the future.'

One constant in both sectors that will not go away is the Middle East and the vast oil reserves the Arab countries are sitting on. Recent reports showed that the region has plenty of stamina left in terms of resource reserves. The Gulf News reported that the UAE (United Arab Emirates), Kuwait and Iraq would be able to continue to pump crude oil into global markets for more than 100 years but that the US, Britain and other Western countries are expected to run out of oil within ten years. Estimates from Western sources showed that the UAE controlled the third biggest recoverable crude resources in the world after Saudi Arabia and Iraq. In 1982 UAE reserves were put at 32.4 billion barrels. At the end of 2002 the territory's estimated reserves stood at 97.8 billion barrels. At current production rates of 2.3 million bpd, the UAE's reserves could last more than 100 years. Also in the century club are Iraq with 112.5 billion barrels and Kuwait with 96.5 billion barrels. Although Saudi Arabia tops the reserves list with 261.8 billion barrels its current estimated reserves would only last a mere 86 years at the current production rate of 9 million bpd.

The report quotes an Arab oil analyst as saying, "In the medium and long run, Gulf states will regain their past prestige and dominate the oil scene again as most other sources are gradually declining and talk about other commercial sources of energy is mere fantasy."

The 2020 doomsday vision carries real weight for Western producers. BP (LSE:BP) (London, UK) estimates that the current US production rate of around 7.6 million bpd could see the country's 30.4 billion barrel reserve depleted within ten years. In 1982 Britain, which has been one of the West's largest producers, had North Sea reserves of 13.9 billion barrels that were down to 4.7 billion barrels at the end of 2002. At current rates these reserves will be depleted in under 6 years from now. Norway with around 10.3 billion barrels could run dry in under 9 years.

For the UAE, Saudi Arabia, Kuwait, Iraq and Iran the 1982 estimated reserves figure stood at 361 billion barrels. Cumulative output from these countries to date has been around 120 billion barrels which would have meant that they had seen their oil wealth decline in absolute terms. But this, in fact, is not the case as major onshore and offshore discoveries have boosted their current reserves to a total of 658.3 billion barrels.

Russia, with 60 billion barrels, and the Caspian sources (which includes Iran) will provide a margin of alternative supply. But Russia has growing domestic markets to feed and China and Japan are encouraging pipelines to thread eastwards to keep their mighty economic machinery working. Some industry seers are still not putting China on their crystal ball screens. The short-term growth rate in auto ownership in that country coupled with a gorilla size annual national growth rate makes for resource competition within the Asian region and between Eastern and Western regions of the globe. Concurrent production interrelationships globalized industrial investment patterns and increasing global supply chain sophistication will hopefully make this competition for resources something less than confrontational.

Gulf News reports that at present oil exports from the five Arab states account for less than a quarter of the world's total supplies but they control 60% of the world's oil wealth.

But beyond 2020 their exports are projected to more than 30 million bpd as the wells run dry in the West.