World proven oil reserves at end 2006 edge down

A British Petroleum service station sign is seen under cloudy skies in south London, in this October 24, 2005 file photo.

LONDON (Reuters) - BP (BP.L) has lowered its estimate of the world's proven oil reserves, for the first time in more than a decade, in its annual Statistical Review of World Energy published on Tuesday.

Global reserves are more than sufficient to meet current production levels for more than 40 years, although accessing the oil is getting tougher due to high exploration and production costs and also to more state control of production, BP said.

World reserves stood at 1.208 trillion barrels at the end of 2006, fractionally lower than 1.209 trillion at end-2005.

The one billion-barrel reduction reflected declines in reserves in Mexico and Norway, partly offset by increases in Russia and Brazil.

Christof Ruhl, deputy chief economist at BP, said the last time the annual reserves figure had fallen in the statistical review was in 1990.

BP's review is widely used as a reference throughout the global energy industry.

Ruhl said the overall 2006 figure could be revised upwards as more data became available. BP's original figure for 2005 had been 1.200 trillion barrels until it was revised upwards after more countries published reserves data.

"We have rolled over the 2005 reserves figures for many countries due to reporting lags," he said, adding that this meant there might ultimately not be a decline for 2006.

He said global proved oil and natural gas reserves had been on an increasing trend since 1980, when BP's data series started.

"They remain adequate to cover expected consumption for decades to come: There is no global scarcity of hydrocarbon reserves."

Reserves in top oil producer Saudi Arabia, for example, rose to 264.3 billion barrels from 261.4 billion.

World oil production in 2006 rose by 0.4 percent to 81.66 million barrels per day, from 81.25 million bpd in 2005, the lowest increase in five years, according to BP's review.

Oil output is going through a big structural shift. Production in the industrialised countries, almost flat from 1996 to 2001, is going into a declining trend, due in part to falls in the UK, Norway and Mexico.

The former Soviet Union has seen rapid growth in output, which rose nearly 4 percent in 2006 to 12.30 million bpd.

SUPPLY/DEMAND BALANCE

BP said global oil production would continue to rise to meet demand, but growth was concentrated outside the industrialised countries and in regions where state oil companies tended to dominate.

"We don't have an aggregate resource problem," said Peter Davies, BP's chief economist. "We have lots of problems how we match global supply and demand on a year-by-year basis in terms of exploiting resources."

Ruhl said government involvement had tended to slow development of new projects but private companies were still involved and it was too early to assess the full impact.

High oil prices over the last five years, with record prices of nearly $80 a barrel last year, have not dampened world economic growth.

This is partly explained by rapid growth in China, the world's second biggest oil consumer, which has alone generated almost half of the world's energy consumption growth over that period.

Growth in industrialised countries has been relatively less energy intensive. "Most consumers already own cars and are adequately heated and cooled," Ruhl said.

In the last five years, world energy demand growth mirrored global GDP growth almost one to one, Ruhl said.

But in 2006, primary energy consumption grew 2.4 percent, while GDP grew 5.3 percent.

"Overall, the data appear to suggest that higher prices are having an impact," he said.

Refining availability was an issue in 2006, when the U.S. industry started the year with 800,000 bpd of Gulf Coast capacity still out of action after the 2005 hurricanes.

Refinery throughput growth last year was concentrated in the Former Soviet Union, the Middle East and Asia.

Total world refinery capacity rose 1.5 percent to 87.24 million barrels a day in 2006 from 85.93 million bpd in 2005.

This year's review, which covers the period to the end of 2006, included an assessment of the size of Canadian oil sands for the first time. They stand at 163.5 billion barrels.