Oil Reserves

What Are Oil Reserves?

Oil reserves are an estimate of the amount of crude oil situated in a particular economic region. To qualify, oil reserves must have the capability of being extricated under current innovative imperatives. Reserves are calculated based on a demonstrated/probable basis, significance oil pools arranged in unreachable profundities, for instance, wouldn't be viewed as part of a nation's reserves.

Understanding Oil Reserves

BP Plc estimated that the world had 1.73 trillion barrels of oil reserves starting around 2018, which would be adequate to meet 50 years of global production at 2018 levels. As per the British oil company's 2019 Statistical Review of World Energy report, Venezuela is the leading country in terms of oil reserves, coming in at 300.3 billion barrels. Saudi Arabia is a close second with 297.7 billion, Canada is third with 167.8 billion, and the U.S. 10th with 61.2 billion barrels.

Here are the world's top 10 biggest oil reserves by country starting around 2018:

The Organization of the Petroleum Exporting Countries (OPEC), in the interim, says the world has 1.5 trillion barrels. The cartel estimates that 79.4% of global reserves are held by its individuals, which incorporates seven of the world's top 10 biggest oil reserve countries — Venezuela, Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates, and Libya.

Recording Oil Reserves

BP's Statistical Review of World Energy is one of the leading sources of energy market data and data, dating back several decades. One more source is the World Oil Review supplied by the Italian oil company ENI SpA.

Like BP's statistical audit, ENI's publication gives insights regarding global oil reserves. In the mean time, the Energy Information Administration (EIA) is a leading authority for U.S. oil reserves with data dating back to 1900.

Special Considerations

One of the critical ratios analysts use to measure the longevity of reserves is the reserve-to production ratio (R/P). The R/P estimates the number of years a reserve base will last at current annual production rates and is utilized by companies operating in the oil industry, as well as oil-delivering countries.

This chart from BP uncovers two critical trends in global oil reserves.

World's Reserves-to-Production (R/P) Ratios by Year

First and generally self-evident, it illustrates the huge increase in South and Central American oil reserves relative to production beginning around 2006 — when Brazil made some critical oil tracks down in its offshore pre-salt bowls. BP currently estimates that the South and Central America region has sufficient oil reserves to last for a long time at current production levels.

Nonetheless, the volume of oil reserves doesn't be guaranteed to convert into production figures. For instance, Venezuela's share of the overall oil production market has slumped in recent years due to internal conflict. As indicated by the 2019 BP Statistical Review of World Energy, the South American nation represented just 1.6% of overall production volumes, notwithstanding having the world's biggest oil reserves.

The other important data is the relentless downtrend in Middle Eastern oil reserves relative to production. During the 1980s, Middle Eastern countries had R/P ratios like what South and Central America appreciate today. Throughout recent years, this ratio has reliably disintegrated as production rates increase and reserves become more diligently to find. Reserves-to-production for the Middle East currently remains at approximately 80 years.

A comparable, yet not as articulated, trend of a descending slanting R/P is occurring in the U.S., which has forcefully increased production throughout recent years. The R/P for the U.S. is about 30 years.

Features

• Oil reserves are the amount of crude oil a country or region has that can be sensibly removed.
• BP estimates show there are reasonable more than 1.73 trillion barrels of oil reserves in the world.
• The top three countries in the world by oil reserves are Venezuela, Saudi Arabia, and Canada.
• Almost 80% of the world's oil reserves are in the Organization of the Petroleum Exporting Countries (OPEC).