As more
oil becomes recoverable, reserve estimates are skyrocketing
With oil still hovering near $50 a
barrel, the last thing people want to hear is that there's even less of the stuff out there than
previously thought. This year investors in the oil industry have been shaken by the revelation that Royal
Dutch/Shell Group (RD ) overstated its proven reserves by at least 23%, some 4.5
billion barrels, with more possible downgrades to come. There's growing disquiet that other major
oil companies may also have inflated reserves.
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But there's one place -- Russia -- where
reserve estimates just seem to go up and up. In its annual statistical survey of world
energy, BP PLC (BP ) has recently revised its estimates of Russia's total proven oil reserves to
69.1 billion barrels, 6% of the world's total, up from 45 billion bbl. in 2001. But according to
auditors with a worm's-eye view of what's actually going on in the depths of Siberia, such
estimates may just scratch the surface of Russia's real potential. According to a recent study by
Dallas-based energy reserve auditors DeGolyer & MacNaughton, whose clients include
leading Russian energy companies such as Gazprom and Yukos, Russia's true recoverable
reserves are between 150 billion bbl. and 200 billion bbl. That's up from industry estimates of
100 billion bbl. a few years ago.