free html hit counter Peak Oil Debunked: 220. KUWAIT DENIES RESERVE DOWNGRADE

Saturday, January 21, 2006


The peak oil "hot topic" these days is a report by Petroleum Intelligence Weekly (PIW) suggesting that Kuwait's oil reserves are half of what is currently claimed. Here's the Reuters report:
Kuwait oil reserves only half official estimate-PIW
Friday 20 January 2006, 1:32pm EST
LONDON, Jan 20 (Reuters) - OPEC producer Kuwait's oil reserves are only half those officially stated, according to internal Kuwaiti records seen by industry newsletter Petroleum Intelligence Weekly (PIW). "PIW learns from sources that Kuwait's actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records," the weekly PIW reported on Friday. It said that according to data circulated in Kuwait Oil Co (KOC), the upstream arm of state Kuwait Petroleum Corp, Kuwait's remaining proven and non-proven oil reserves are about 48 billion barrels.Source
This news triggered a lot of whoops and teeth-baring in the peak oil monkey cage over the last few days, but that just demonstrates the peak oil community's insecurities and desperate need for immediate validation.

The whole hullaballoo is based on just about the flimsiest evidence imaginable. First of all, the Kuwait Oil Company (KOC) flatly denies it:
PIW's Kuwait report 'not accurate'
Posted: Saturday, January 21, 2006
Kuwait City
A senior Kuwaiti oil official has cast doubt on the accuracy of a report by industry newsletter Petroleum Intelligence Weekly (PIW) that the Opec producer's oil reserves are only half those officially stated.

'I have no idea where they got this figure from ... I don't think it's accurate,' Farouk Al Zanki, the chairman of state-run Kuwait Oil Company (KOC) said in Kuwait City.Source
Second of all, the provenance of the information is highly suspect. The peak oilers are operating on a third hand report in Reuters, of a second hand article in PIW (which basically no one has read because it's behind a subscription fire wall), reporting on an internal document from the Kuwait Oil Company which no one has seen, and which was leaked by an unnamed source for unknown reasons. Who leaked it, and why? I think I'll wait for the story behind this document before I stop pressing the snooze button.

Sooo... It looks like we're right back where we started from. The Kuwaitis say they have the reserves, and the peak oilers say they don't, and there's not a shred of bona fide evidence to decide the question. Of course, that's not a problem for the peak oilers because they believe it's all a conspiracy, and that's why they don't need evidence. The lack of evidence is just further proof that a nefarious conspiracy is operating.

Anyway, it's all a tempest in tea cup. Even if the Kuwaiti reserves are halved, who cares? How quickly, and to what extent, will that affect oil production in the next five or ten years? Not much. In fact, the peak oilers have carefully avoided the question of what downgraded Kuwaiti reserves would do to the world supply curve. Their reasoning is on this level: "The Kuwaiti oil reserves got downgraded, so look out! The shit is going to hit the fan soon!" Yes, now they can point to a 3rd hand report which has been denied by official sources, but they still can't point to PEAK OIL, and that's all that really matters.

Even if the Kuwaiti report is true, and all the other OPEC reserves are overstated, and peak oil happened last year, I'm still not particularly concerned about it because: a) I've admitted and accepted the reality of peak oil from the very beginning, and b) We don't really need oil. Today, it's primarily being used to fuel frivolous lifestyle bullshit like single-person commuting in the U.S.

The doomers are going to have to work a lot harder if they want to debunk the debunkers. And as long as civilization and the economy are up and running, the doomers will remain WRONG WRONG WRONG.
-- JD


At Sunday, January 22, 2006 at 4:20:00 AM PST, Blogger Chris Vernon said...

See my alternative analysis of the situation here: Kuwaiti Reserve Reverse

At Sunday, January 22, 2006 at 8:02:00 AM PST, Blogger al fin said...

Humans are not rational. Instead they are very superstitious. Theories of doom are very attractive to idle minded people. Such theories make them feel important and wise, and gives them a reason to live.

At Sunday, January 22, 2006 at 8:17:00 AM PST, Blogger Quantoken said...


Have you become the propaganda tool of the Kuwait Government?

I am not a bit surprised at all that the Kuwait Government would jump out denying this new report. I would be completely shocked, on the other hand, if they had kept silent. Think about this way: They have an official lie, which is exagerating the true figure of their oil reserve. They kept the lie for a couple decades and maintained that official position all the time. And now some one says they are lying. Would you not expect they to come out and continue to defend their official position? Would you expect that they keep their mouth shut, thus indirectly admitting that they have been lying all the years? No!

So why do you so hurry to jump out and defending the Kuwaitis, just as they are doing what they are expected to do, sticking to the position they always sticked to. The latest Kuwait Government statement says nothing new and adds nothing worth noting. If you trusted their figure in the past, you still trust them now. If you do not trust their past statements, why do you start to trust them now?

At Monday, January 23, 2006 at 12:13:00 AM PST, Blogger JD said...

The USGS figures for Kuwait are: 86Gb (identified reserves) and 112 Gb (URR).
They arrived at those numbers by conducting a stupefyingly detailed survey of the geology of Kuwait. I'm not sure why an unconfirmed 3rd hand report should be given precedence over that survey. If the USGS made some error in geological assessment, what was it?

At Monday, January 23, 2006 at 12:20:00 AM PST, Blogger JD said...

You might also want to look this over:USGS LINK

At Monday, January 23, 2006 at 2:38:00 AM PST, Blogger Chris Vernon said...

Nice credentials for that first link jd:

This chart prepared by Bill Kovarik, Ph.D., formerly a journalist and editor of publications such as Energy Resoruces and Technology and Latin American Energy Report. He is currently a Professor of Media Studies at Radford University.

Sources for this information are as follows:

World Crude Oil and Natural Gas Reserves, January 1, 2000 US Department of Energy, Energy Information Administration. These oil reserve estimates have recently been given with additional footnotes explaining, for example, that one half of the Kuwait Neutral Zone reserves are now assigned to Kuwait. (Why only one half is not stated). Very recently a disclaimer was added by the Energy Information Administration, which now says it "does not attempt to develop estimates for foreign countries. As a convenience to the public, EIA makes available foreign fuel reserve estimates from other sources, but it does not certify these data.." EIA sources for world oil reserve estimates are the following oil industry trade publication estimates:

(1) PennWell Publishing Co.,Oil and Gas Journal, Vol 97, No. 51, December 1999.
(2) Gulf Publishing Co., World Oil, Vol 221, No. 8, August 2000

Note that the Department of Energy does not use USGS government statistics. When asked why, DOE did not comment and USGS said it was "not a political agency."

I don't believe the USGS has a good idea about what's going on in Kuwait - how could they?

We just don't know what's going on there nor you, me or the USGS. The only people who do know are a very small number of Kuwaitis.

However – even you must admit the compelling case made by the OPEC quota wars, there was motive, there has been no independent assessment and no new discoveries during the period. All these countries booked tens of billions of barrels with a few years of each other without discovering any new fields. Also of note is that the neutral zone with joint administration didn’t see a similar increase. If the increases were due to systematically conservative reporting up to that date or to subsequent recovery techniques improvements then the neutral zone would also of reported similar increases.

What is your assessment of the OPEC quota wars? Or even why the reported reserves don’t fall with production?

At Monday, January 23, 2006 at 4:26:00 AM PST, Blogger JD said...

I don't believe the USGS has a good idea about what's going on in Kuwait - how could they?

The following report from the USGS describes the geology of Kuwait, Ghawar and neighboring areas. I encourage you to thumb through it, page by page. Look at the maps and figures. You'll see that the USGS knows an astounding amount about the geology and petroleum systems of Kuwait.

Total Petroleum Systems of the Paleozoic and Jurassic, Greater Ghawar Uplift and Adjoining Provinces of Central Saudi Arabia and Northern Arabian-Persian Gulf

What is your assessment of the OPEC quota wars? Or even why the reported reserves don't fall with production?

You're right. It looks fishy. But the bottom line is that those who say the numbers are wrong have no hard evidence to prove it. That's a big problem if you are trying to approach the question scientifically. Basically, I'm agnostic because there's not enough evidence to decide the question.

If you asked me my leanings, I'd say look at the USGS report above. I'm not a geologist, but that looks like in-depth, painstaking geology to me. It makes sense; the USGS is staffed with serious, hard working geologists. It certainly looks more credible than a pay-per-view story about a nebulous leaked memo which no one has authenticated.

At Monday, January 23, 2006 at 5:15:00 AM PST, Blogger Chris Vernon said...

Here's an excellent discusison on Kuwait: Kuwait.

At Monday, January 23, 2006 at 5:56:00 AM PST, Blogger JD said...

chris, your link doesn't work.

At Monday, January 23, 2006 at 7:32:00 AM PST, Blogger Chris Vernon said...

Ah, sorry. Here is the link:

At Monday, January 23, 2006 at 8:40:00 AM PST, Blogger Quantoken said...

JD said:
"They (USGS) arrived at those numbers by conducting a stupefyingly detailed survey of the geology of Kuwait. I'm not sure why an unconfirmed 3rd hand report should be given precedence over that survey."

"3rd hand report" says who? I would best use that title to describe the USGS report. Has USGS sent any scientist to Kuwait, and did extensive geological exploration there? I don't think they did. The Kuwaitis never invited them. I consider USGS as a bunch of bureaucrates sitting in their nice air-conditioned offices in Washington, and took whatever data the Kuwaitis handed to them unchecked and compile into their "report". Such "report" has even less credibility than the official statement of the Kuwaitis government.


At Monday, January 23, 2006 at 8:56:00 AM PST, Blogger Quantoken said...

I would say there is hard evidences. The quota war did happen, and they did report a sudden jump of the reserve number, without the backing any major geological discovery, back in the 80's. Their official report of the reserves are black letter printed on white papers so that's a hard evidence of lying when you see that sudden jump, unless they can cite any major discovery attributable to that jump, and explain away why all nations had jumpped up their reserves at about the same time.

Second piece of hard evidence, is clearly that they did NOT reduce annual productions from the reserve year by year. The production number is not fictional. We actually burned fossil fuels that were produced from the reserve. So how can you not deduce the numbers produced, and that the reserves remain constant?


At Monday, January 23, 2006 at 9:05:00 AM PST, Blogger Quantoken said...

The USGS report does look very detailed but that does not lend it credibility. They are still third hand material. It's called bureaucracy, you know, reports of tens of thousands of pages which actually say nothing. Things like the White House CIA spy leak. The actually leakage was a simple one time event involving one person talk to another person for 10 seconds over the phone. The investigation lasted several years costing several hundred million dollars, and produced a report of ten thousand pages long, and they still can not spell out the simple truth who leaked it to who and when. That's bureaucracy! Using your logic, a 10 thousand painstaking investigation report must be very credible. They are less credible than a street rumor or a whistle blow by a deep throat! It's called bureaucracy for crying out loud.


At Monday, January 23, 2006 at 2:13:00 PM PST, Blogger DC said...

The doomer morons over at have been worked up into a lather over this news. I bet dollar to donuts that the likes of Savinar, Rupert, et al. have already taken it as gospel, despite not even having read the source.

This just brings the cabal of quota conspirators who don't know diddly about the different categories of reserves back into the spotlight. They just can't accept the explanation that each country graduated probable reserves to proved reserves. It makes sense to everyone but the doomer morons: in exchange for more revenue up front, you commit to future infrastructure investments to develop more economically-inefficient reserves. Of course, doomers like Savinar aren't known for their economic prowess. After all, the whole notion of discounted cash flows continues to elude them.

Finally, do you want to understand why no one save for the mentally-challenged and emotionally-unstable are bothered by the reserves, production and demand picture? Go look up a tabulation of probable and possible reserves. You'll find that the ME is realy a bit player under such a context. In other words, when someone harps on about two thirds of the remaining oil residing in the ME or that there are "only" 2 trillion barrels of oil left to be produced, they are referring to the amount of proven reserves. Of course the easiest oil is left in the region with the longest-standing and most developed production infrastructure. However, now that the days of more expensive oil development is upon us, the oil companies will push to develop other regions in the world, and some fraction of the vast quantities of probable and possible reserves will be economically developed. Thus, the doomers resort to fallacious contrivances regarding leveraged economies, "solutions in isolation" and Jevon's Paradox.

Honestly, I wish that the production picture looked a lot less rosy because I do buy into the more dire global warming scenarios (though I am short of Lovelock's Waterworld).

At Monday, January 23, 2006 at 10:55:00 PM PST, Blogger JD said...

Hi dc,
Welcome to POD. I agree with you about global warming and the production picture. In a way we've got way too much stuff out there left to burn.

At Tuesday, January 24, 2006 at 9:03:00 AM PST, Blogger popmonkey said...

dc, is it really necessary to resolve to name calling when discussing doomers? it makes the anti-doomer argument look just as visceral and unscientific as that of savinar and his ilk.

please, lets just stick to the facts.

and yes, i totally agree with you on climate change. i saw a post on after following the thread from the POD group about "them" talking about "us" again (side note, i miss WildWell here :( ). anyway, it was some guy saying basically that if PO is coming, he's going out with a bang, meaning new car and toys. that, to me, is the biggest danger of PO. resignation followed by incredible levels of selfishness.

it's very similar to the plight of AIDS victims who max out their credit cards and "live it up" expecting to live for just 2-3 more years and then, due to advances in medicine find themselves living for a decade and suddenly heavily in debt.

my philosophy. prepare, but never throw in the towel.

At Wednesday, January 25, 2006 at 6:52:00 AM PST, Blogger AD said...

jd - Interesting blog. This is my first time visiting and commenting. I agree with you that it is important to treat the initial report (third-hand, from an anonymous source released for unknown reasons) skeptically.

The reason that peak oilers were to excited about the report is that it hints at cracks behind the facade of what we see as a corrupt program to boost reserve figures. In other words, while not necessarily a big deal in and of itself, it indicates there may be something more to the hypothesis that OPEC producers are inflating their (unaudited) stated reserves to increase their individual market shares.

Just as I think that the initial report needs to be treated skeptically, so, too, does the denial. Anyone who first saw the report knew it that officials had to it, and as soon and as vigorously as they could. C'mon now. Of course they'd deny the report. So to me, the fact that it happened isn't particularly interesting.

At Wednesday, January 25, 2006 at 5:58:00 PM PST, Blogger JD said...

Hi ad,
Welcome to POD, and thanks for your comments. As I said in my reply to Chris Vernon, I'm basically an agnostic on the question of reserve inflation. I have no bona fide grounds for assuming that the Kuwaiti reserves are inflated. Certainly, the way they have handled their reserve reporting is politicized and suspicious, but that in itself does not prove that the number is wrong. It can only be definitively proved wrong by looking at the actual geology. I might change my mind if someone with strong geological credentials refuted the USGS number on geological grounds. Please refer to the USGS material (Total Petroleum Systems of the Paleozoic and Jurassic, Greater Ghawar Uplift and Adjoining Provinces of Central Saudi Arabia and Northern Arabian-Persian Gulf) which I linked to in my response to Chris Vernon. What is wrong with the USGS's geological analysis? No one is answering that question. Their only response is to scoff at the USGS, and that is not enough for me. The USGS has analyzed the geology of Kuwait in stultifying detail, and arrived at numbers similar to the official Kuwaiti numbers. That needs to be explained.

At Sunday, January 29, 2006 at 1:51:00 AM PST, Blogger Oilguy1 said...

"The USGS has analyzed the geology of Kuwait in stultifying detail, and arrived at numbers similar to the official Kuwaiti numbers. That needs to be explained."

I would be intersted to know what is being ment by "stultifying detail". Do they have access to 3-D seismic? Are they estimating based on analogy of environments? Are they running probablistic models to do this?

The oil and gas industry is not one that has been around for hundreds of years. The statistical data is limited and if their work is based on statistics than I for one would not put my money on them.

All fields that were discovered by companies I worked for were found not through USGS work but by the companies data gathering and offset work from near by fields.

Regional studies are good but boy do they fall on their face with time.

At Tuesday, March 28, 2006 at 5:04:00 AM PST, Blogger aceditor said...

The USGS did not forecast production, only possible reserves under a very wide range of probability. A recent article by the USGS (AAPG Bulletin 89/8) compares the actual figures for the last eight years with what they forecast back when the World Petroleum Assessment 2000 was written in 1996. The World Petroleum Assessment 2000 estimated the amount of oil to be found from 1996 to 2021 at 95%, 50% and 5% probabilities. Their 50% probability is the one that is commonly quoted.

AAPG Bulletin 89/8 shows that in 27% of the time (1996-2004) only 11% of the oil predicted was actually discovered whilst 28% of the 'reserve growth' was realised. Both figures suggest that their 50% figures for both discovery and reserve growth were overoptimistic as both should be significantly larger in the first few years than in the last few years. It is therefore possible for Kuwait's reserves to be half of those commonly quoted if you take the USGS's 95% figures which are panning out to be more correct than their 50% figures..


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