Treasure Hunt

Oil reserves are considered to be the amount of technically and economically recoverable oil as some oil is either impossible to obtain due to lack of the required advanced technology or economically unprofitable as the extraction costs are higher than the profits made from selling the oil. There exist classifications of oil reserves related to the degree of certainty as it is very difficult to predict how much oil is located in the reservoir. Recovery factor is the ratio of reserves to the total amount of oil located within the reservoir. Determining recovery factor depends on the methods of oil recovery available in that particular place as well as on the technology the country has available to extract it.

OPEC provides annual statistics about the amount of oil that is thought to be located in different reserves. According to the 2013 statistics, the highest proved oil reserves are currently found in Venezuela at 20% of the global reserves followed by Saudi Arabia with 18%, Canada at 13% and Iran at 9%. Further oil reserves can be seen in Figure 1 below.

Figure 1.

Source: Wikipedia. List of countries by proven oil reserves.

However these figures are often wrong and include a lot of uncertainty. Some uncertainty is due to the lack of knowledge as the reserves cannot be examined directly so estimations are used. Upon discovery, early estimates often provide much lower figures for the amount of oil actually available in the reserve so the reserve «grows». Furthermore this process is further complicated by international politics where many oil-producing countries do not actually reveal the real amount of oil found in their reserves. Finally countries also have government-controlled national reserves mainly for security reasons but also for economic reasons that are excluded from total reserves count. For example USA is thought to have about 4.1 billion barrels held in their national reserves. Figure 2 below shows the distribution of world oil reserves.

Figure 2.

Source: Wikipedia. Source: Wiki. A map of world oil reserves, 2013.

Two-third of reserves of the world oil are believed to be in the Middle East but 85% of those are irrelevant to global production in 2010 (Odell, 2004). The world sees quite a large issue of under-exploration and limited exploitation of the oil reserves and so some might have not been found yet. Whilst USA  has been the exploration and search for oil reserves, other parts of the world such as The Middle East itself are very under-explored and drilling deep into the ground could well establish the discovery of new oil reserves increasing the world oil reserves. However figure 2 above and figure 3 below the current known world reserves of oil although it can be assumed that these are underestimated. Albeit The Middle East, North America and the former Soviet Union, the areas of maturity in respect to oil exploitation are very limited to essentially just a few locations: Gulf coastal strip of Mexico, Venezuela, parts of Indonesia and some small areas in Europe such as the North Sea in England (Odell, 1994).

Figure 3. 

Source: Oil and Energy Trends, May 2010. World proven crude oil reserves by region.