BP report shows oil output falls for first time since 2002

By Jane Merriman

LONDON (Reuters) - World oil production fell by 0.2 percent in 2007, the first decline since 2002, and proven oil reserves were flat, BP said in an annual review released on Wednesday.

Production fell by 130,000 barrels per day (bpd) last year to 81.53 million bpd and reserves were essentially flat at 1.24 trillion barrels, London-based BP said in its 2008 Statistical Review of World Energy.

The figures compiled by BP underline the world's challenge of boosting production to meet growing demand. Oil prices have been rising since 2002 and last week hit a record $139.12 a barrel, partly because of supply concerns.

"The defining feature of global energy markets remains high and volatile prices, reflecting a tight balance of supply and demand," said Tony Hayward, BP's chief executive, at the launch of the review.

"This has put issues such as energy security and alternative energies at the forefront of the political agenda worldwide."

World production fell in part because of supply restraint by the Organization of the Petroleum Exporting Countries (OPEC), source of about two in every five barrels of oil.

Supply outside OPEC stayed weak, rising by just over 200,000 bpd in 2007, while output in member-countries of the Organisation for Economic Co-operation and Development (OECD) fell for a fifth straight year, BP said.

OPEC production dropped by 350,000 bpd following production cuts implemented in November 2006 and February 2007.