‘We’ve got 2 trillion barrels of the stuff left’

Sylvia Pfeifer finds that the doomsayers who have been predicting that we’ll soon be running out of oil are far too pessimistic

When Jeroen van der Veer, the chief executive of Royal Dutch Shell, unveils a strategy update this Thursday, investors will want to know one thing: is Shell finding more oil?

With oil at $73 a barrel, nobody can pump the stuff fast enough. But in order to keep pumping it, oil companies also need to find new reserves. Unfortunately, most western oil majors aren’t getting any better at finding oil, let alone at building their reserves. The last discovery of more than 5bn barrels was the Kashagan field in Kazakhstan in 2000.

According to analysts at Sanford Bernstein, western oil companies had an average reserve-replacement ratio of 129 per cent over the past five years – in other words, they found 29 per cent more oil and gas than they pumped. Last year, however, that ratio fell to 114 per cent and that includes reserves acquired through acquisitions.

The news this week from Shell on production is not expected to be any rosier. Analysts expect van der Veer to announce that Shell will come in at the lower end of its targeted production for this year of between 3.5m and 3.8m barrels of oil equivalent per day.

The Telegraph