Where's the rest of the oil?
While pessimists fear that the planet's oil supply will run out in the not too distant future, BP's latest deal with Russia's Rosneft to drill in the Arctic appears to tell a different story. Richard Northedge reports on how global consumption is rising and falling
When BP first formed an alliance with Rosneft in 1998 to develop the Sakhalin fields in the Pacific Ocean, the UK oil giantestimated Russia's oil reserves at 56 billion barrels.
When BP agreed its share-swap with the Moscow-based energy group last weekend, the estimate was 75 billion barrels, and development of Rosneft's licences inside the Arctic Circle could increase production enormously.
Such advances undermine the pessimists' predictions that the world's oil will imminently run out. In 1956, when the concept of "peak oil" – the point at which production starts falling – was formulated, US output was expected to fall from the late 1960s. But new discoveries have constantly pushed that date back. BP was estimating world oil reserves at 1 trillion barrels 20 years ago: now, despite record consumption, the estimate is 1.333 trillion.
In the developed world at least, energy consumption has flattened and may already have started a permanent decline. Demand fell by 1.1 per cent in 2009, although that may have had as much to do with short-term recession as with long-term efficiencies and changes in usage.
Francis Osborne, an analyst at energy consultants Wood Mackenzie, believes that demand has now bounced back and is heading for new records. "Just three years from the onset of the great recession, global oil demand has recovered to the pre-recession peak seen in 2007," he says.
But there are changes both for the producers and consumers of oil. While the 34 developed nations in the Organisation of Economic Co-operation and Development (OECD) have reduced usage by almost four million barrels a day since 2007, the emerging states are vastly increasing their demand. China's consumption rose by 8.7 per cent last year.
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