IEA: Unclear If Oil Reserve Growth Will Contribute to Future Supply

Recent increases in oil reserves in Iraq, Iran and Venezuela are “good news,” but it remains unclear whether they will contribute to future supply, Nobuo Tanaka, executive director of the International Energy Agency, or IEA, said Monday.

“To have more reserves is certainly good news, because it gives us a more precise prediction of costs and necessary investments,” Tanaka told Dow Jones Newswires at an energy conference in Moscow. “But the issue is how much investments will happen to develop these reserves, how this will increase production capacity.

“Until then, we’re not sure whether it will contribute to future supply,” Tanaka said.

Iraq dramatically increased the estimate of its proven oil reserves earlier this month, the first revision to the data since 2001. Following the increase, Iran and Venezuela–both rivals for a share of total production within the Organization of Petroleum Exporting Countries–said they were raising their own reserves estimates.

Some experts, however, expressed skepticism that Iraq had undertaken sufficient exploration to justify the new estimate, which hasn’t been independently reviewed.

Asked whether he thought the reserve increases are real, Tanaka said, “We don’t know. We cannot make any assessments by ourselves.”

The Paris-based energy watchdog is now analyzing investment data to access the global oil market situation to 2015.

“Depending on the current numbers, if the economy growth comes back as robust as 4% to 5% globally to 2015, then we may have a tighter market,” Tanaka said.

“In the short term, we have a good supply, but in the midterm the market is getting tighter again, so we need more investments. But we haven’t seen it yet,” he said.

Rigzone