The "bidding game" seems on. First Iraq, then Iran and now Kuwait — the trend is catching up.
Iraq apparently made the first move. Earlier the month, Baghdad announced it is raising figures of its proven oil reserves by a quarter — from 110 billion barrels to 143 billion barrels, surpassing Iran and putting it behind only Saudi Arabia in terms of conventional crude, and third after Venezuela if unconventional reserves are counted.
A week later, Iran too unveiled a massive boost in its estimated oil reserves. The new Iranian Oil Minister Massoud Mirkazemi, inducted into the Cabinet only on Aug. 20, made the announcement just days prior to the OPEC ministerial meeting in Vienna. He declared the new Iranian reserves figure to be 150.31 billion barrels, up from the previous estimate of 138 billion barrels and added that figure would be revised even higher soon.
"This latest figure will definitely go up by the end of the year," Reuters quoted him as saying.
The move saw Iran wrest back its place as the holder of the third-largest reserves base in the world. Mirkazemi also raised his estimate for Iran's gas reserves - the second biggest in the world after Russia's - to 33.1 trillion cubic meters, from 28 Tcm. Iran had discovered a new gas field in the southern Hormuzgan province, he said. The Sefid (White) field has an estimated 70 billion cubic feet of gas in the field, 72% of which is recoverable, he emphasized.
Then late last week, Kuwait also announced adding at least 12 billion barrels to its crude reserves. As per the OPEC data, Kuwait holds the world's fifth largest crude reserves, putting it currently at 101.5 billion barrels, after Saudi Arabia, Venezuela, Iran and Iraq.
Earlier in April, the Kuwaiti deputy prime minister for economic affairs had already hinted that the reserves in Burgan field were "much higher" than previously announced. Now citing well-informed oil sources, the Kuwaiti daily Al-Jarida said the new oil was found in Greater Burgan, the world's second largest oil field after Ghawar in Saudi Arabia, taking its reserves estimate close to 70 billion barrels.
Informed sources told the paper that new reserves have been discovered at a number of other reservoirs following a comprehensive study, which could boost the Gulf state's reserves further.
Kuwait's reserves have been an issue of considerable debate in recent years. In April, Kuwait's Deputy Premier for Economic Affairs Sheikh Ahmad Fahad Al-Sabah told a symposium that Burgan reserves were in fact higher than published figures. However, way back in January 2006, industry newsletter Petroleum Intelligence Weekly (PIW) had challenged the Kuwaiti reserve data, asserting that it had seen some internal Kuwaiti records that put its reserves at 48 billion barrels only. The official Kuwaiti figures are fudged, PIW had then claimed, emphasizing that Kuwait's fully proven reserves amounted to only 24.2 billion barrels and that Burgan holds only 20 billion more barrels. Kuwaiti oil officials, however, robustly contradicted the PIW report, saying it did not give an accurate and complete picture and it failed to take into account undeveloped reservoirs.
The report created a furor then — all around — raising question marks about the reserve figures of other OPEC producers too. Accusations kept flying that the reserves data being put forward by the producer's were fudged for strategic reasons.
The recent pronouncements over the last few weeks point to a rush to enhance the national reserves of some member countries. It may rekindle the debate about the very accuracy of the OPEC reserves data. This could also be a preamble to renewed pressure within OPEC to increase the output quota of the respective countries. One analyst felt that the countries were in a "bidding war" over reserves - usually a consideration along with other criteria such as production capacity - when it comes to allocating output quotas within OPEC.
Amrita Sen, an analyst at Barclays in London said that the rival claims by Iran and Iraq (and now Kuwait) "looks like a bidding war". During the Iran-Iraq war in the 1980s OPEC meetings too were dominated by Iraq demanding an output quota equal to Iran's. The situation was only resolved after the war, when some OPEC members gave up some of their shares for Baghdad to have an equal quota.
Sen however clarified that the headline reserves figure was only part of the story, and did not reflect a country's ability to pump crude and get it to market. "It is not a question of how much reserves they have got in the ground but how much oil they can produce. Iran's production rate from mature fields is one of the highest in the world," he said.
And in the back drop of all this, when Minister of Petroleum and Mineral Resources Ali Al-Naimi, who has been playing midwife to Saudi oil for decades now, asserts that despite all the claims and proclamations, the fact remains that cheap (Middle Eastern) oil era was far from over, he had a point. He indeed cannot be written off. For indeed no one could be better placed that Al-Naimi to assert so - for he has been an industry insider for more than five decades now and knows the ins and outs of the global gas station - that Saudi Arabia definitely is.
While addressing a conference celebrating fifty years of OPEC, Al-Naimi underlined the Ghawar field - measuring 280km by 30km and by far the largest conventional oil field in the world - has 88 billion barrels of remaining reserves.
Al-Naimi's estimate of Ghawar's remaining reserves is greater than what analysts such as the late Matthew Simmons have been underlining all these years. But in an era, when Aramco is definitely and openly claiming to be heading toward 70 percent recovery from its fields, instead of the industry average of 50 percent, upping the recoverable reserves from current estimates is definitely possible.
Bidding or no bidding and whether one like sit or not - thanks to technology - OPEC reserves are definitely on up.