Some analysts such as campbell 1997 argue that

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Unformatted text preview: much disagreement in the industry about exactly when demand will irreversibly exceed supply. Some analysts, such as Campbell (1997) argue that production of conventional oil, which he defines to be that oil with a depletion pattern which starts at zero, rises rapidly to a peak, and then declines rapidly, will peak in 2010 (figure 3.2). Others believe it will last much longer: “…the world is running into oil not out of it ... The issue [of limited oil resources will be] unimportant to the oil market for 50 years” (Odell, 1995) World Oil Production (after Campbell 1997) 30 25 20 Billions of 15 barrels/year 10 5 0 1940 1960 1980 2000 2020 2040 2060 Figure 3.2: Campbell’s prediction of world oil production after 1996 (actual production to 1996 and then predicted thereafter) (source: Campbell, 1997 p100) Yet, much of this is conjecture. What is known is that worldwide proven reserves have increased by approximately two thirds since 1970 but the countries that contain ample quantities of low cost oil, and which account for most of that increase, are currently inaccessible to western firms (figure 3.3). Middle Eastern countries that are members of the Organisation of Petroleum Exporting Countries (OPEC), for example, account for almost sixty percent of the worlds’ proven reserves (figure 3.4). 43 250 200 Remaining 150 yet-to-produce oil in Billions 100 of Bbls Alg eria UK Norway Nig eria Libya M e xi c o China Venezuela USA Kuwait Abu Dhabi Iran Iraq Former Soviet Union 0 Saudia Arabia 50 Figure 3.3: Distribution of remaining (Yet-to-Produce) oil (in Billions of Bbls) by country (calculated by subtracting total production of conventional oil to date from Campbell’s estimate of cumulative production of conventional oil and dividing by country) (source: Campbell, 1997 p 95) 600 500 Remaining yet- 400 to-produce 300 oil in Billions of Bbls 200 (Unfors e e n) (ot he r) Middl e Eas t Eas t We s t Europe Am e rica Nort h Africa Am e ri ca Lat i n Euras i a 0 Middl e Eas t 100 Figure 3.4: Distribution of remaining (Yet-to-Produce) Oil (in Billions of Bbls) by region (calculated by subtracting total production of conventional oil to date from Campbell’s estimate of cumulative production of conventional oil and dividing by region) (source: Campbell, 1997 p95) However, nationalism runs high in Saudi Arabia and Kuwait and relationships within Iraq are tenuous – a situation which is unlikely to change in the near future (The Economist, 1996). Moreover, whilst the statistics might indicate that technically the oil firms are reporting increased reserves in reality this conceals two trends. Firstly, 44 by using new technology either to extend field life or to exploit fields that were previously inaccessible, oil companies have been able to increase their reported reserves. Secondly, petroleum companies are becoming increasingly reliant on gas which is harder to transport and less profitable to produce (The Economist, 1996). Some, such as Laherrère (1999), are more cynical and believe that the bulk of the recent...
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