June, for energy aficionados, means the release of the annual Statistical Review of World Energy. Formerly compiled by BP and since last year by the Energy Institute, it is full of essential data.
But one set of facts, which used to be the energy industry’s lifeblood, hasn’t been updated since 2020 and doesn’t look likely to be – oil, gas and coal reserves.
Daniel Plainview, a wildcatter (who drills wells in areas not known to be oilfields) in the film There Will Be Blood, set a century ago, would kill for a few thousand barrels of oil reserves – but how much do we have now?
In 2020, BP reported that the world had 1,732 billion barrels of oil, 6,642 trillion cubic feet of natural gas and 1,074 billion tonnes of coal. Based on the production rates at that time, that equated to 54 years of oil, 49 years of gas and 139 years of coal.
Subtracting subsequent extraction, and assuming no additions, there should now be 1,630 billion barrels, 6,213 trillion cubic feet, and 1,048 billion tonnes, respectively.
In reality, there have been major discoveries in countries such as Guyana and Namibia since, as well as in the UAE. Improved recovery will have replaced some reserves even in countries that did not have significant new finds.
In February, Qatar announced it had enlarged estimates of its North Field by another 240 trillion cubic feet of gas, enough on its own to cover more than a year and a half of global production.
Since Mr Plainview and before, reserves life was a key measure of the health of an oil company or a major oil-producing country. The figure should not be interpreted literally – production falls off gradually rather than stopping suddenly after a fixed number of years.
But, as a guideline, if the reserves-to-production ratio were falling, the company or nation was liquidating its assets and might not continue in business if it did not turn things around.
Several of the mega-mergers around the early 2000s, tie-ups such as Exxon and Mobil, and BP, Amoco and Arco, were encouraged by the need to replenish reserves. In 2004, Shell found itself in crisis when it had to reveal it had heavily overstated its reserves – the then chief executive Phil Watts was forced to resign.
Companies still have to report their own reserves for regulatory reasons. But investors don’t find this important any more. Far from emulating Mr Watts, Shell now says that three-quarters of its reserves will be produced by 2030 – and portrays this as positive.
So, what has changed that means reserves estimates today aren’t even worth updating?
First, BP found it wasn’t worth the trouble. Some countries would complain when the company, trying to be a neutral arbiter, would report numbers they considered too low. Commercial consultants, government agencies such as the US’s Energy Information Administration, and the Oil and Gas Journal publish their own, varying figures.
Their numbers are based on a variety of often inconsistent public sources using different standards, and official national figures of sometimes questionable quality. Venezuela, for instance, claims the world’s biggest reserves, but most of this is the extra-heavy, sticky crude of the Orinoco belt – much of which may not be commercial, extractable at all, or unlikely to be developed because of the country’s drawn-out economic shambles.
Second, the emergence of shale oil and gas has changed the paradigm. Shale resources aren’t found in discrete accumulations like traditional fields – they extend across huge areas. The limitations on extracting them are how good the reservoir rock is, how intensively companies drill and fracture, and whether oil and gas prices are high enough to cover costs – not on the theoretical quantity the shale contains.
Third, though, and most importantly – do reserves even matter anymore? Attention has turned away from the early 2000s scare of “peak oil production”, when many worried incorrectly that oil output was about to go irreversibly into decline.
Instead, talk is now of when “peak oil demand” will come, the point at which factors such as rising fuel efficiency and more use of electric vehicles lead to global consumption dropping inexorably.
Coal, polluting and carbon-intensive, is even more exposed. It can be easily replaced by gas, renewable sources or nuclear power. Reserves are so colossal that it seems indeed likely that most will be left in the ground permanently.
To stay below the target of 1.5°C of global warming, the remaining carbon budget – the total amount of carbon dioxide we can emit – is about 200 billion tonnes. We are currently spewing about 40 billion tonnes into the atmosphere each year.
Just current oil and gas reserves exceed the carbon budget by more than five times. Coal surpasses it more than 10 times. No wonder there does not seem to be much point in carefully quantifying a few billion barrels of reserves here and there.
There are ways of using fossil fuels without emissions – for instance, with carbon capture and storage. Still, it’s clear that we are not going to dig up and burn every last barrel and tonne. The constraint on fossil fuel use is not the amount we can find, but the amount we can tolerate for a liveable climate.
It’s amazing that over about two decades, the mindset of an entire major industry has changed so completely. The search from Mr Plainview to Mr Watts, for what seemed a fundamentally scarce resource, is over. It can still be worth looking for new fields, but only if they are lower-carbon and lower-cost to produce than existing deposits, or if they bring some geopolitical or energy security advantage.
Environmental groups, though, haven’t caught up. On Thursday, they celebrated a British Supreme Court judgment blocking drilling of some wells in a small field near London because of the climate impact of the oil production when finally combusted.
This oil, if not extracted in the UK, will clearly be replaced by production from the US or Saudi Arabia or another country.
It’s time climate campaigners and judges woke up to what the energy industry has known for years. The future of our climate depends on what we do on the surface, not on exactly what quantity of carbon might be hiding in the rocks a few thousand metres below us.
Robin M Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
match info
Manchester United 3 (Martial 7', 44', 74')
Sheffield United 0
Where to submit a sample
Volunteers of all ages can submit DNA samples at centres across Abu Dhabi, including: Abu Dhabi National Exhibition Centre (Adnec), Biogenix Labs in Masdar City, NMC Royal Hospital in Khalifa City, NMC Royal Medical Centre, Abu Dhabi, NMC Royal Women's Hospital, Bareen International Hospital, Al Towayya in Al Ain, NMC Specialty Hospital, Al Ain
More from Armen Sarkissian
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Silkhaus%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Aahan%20Bhojani%20and%20Ashmin%20Varma%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Property%20technology%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%247.75%20million%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Nuwa%20Capital%2C%20VentureSouq%2C%20Nordstar%2C%20Global%20Founders%20Capital%2C%20Yuj%20Ventures%20and%20Whiteboard%20Capital%3C%2Fp%3E%0A
PREMIER LEAGUE STATS
Romelu Lukaku's goalscoring statistics in the Premier League
Season/club/appearances (substitute)/goals
2011/12 Chelsea: 8(7) - 0
2012/13 West Brom (loan): 35(15) - 17
2013/14 Chelsea: 2(2) - 0
2013/14 Everton (loan): 31(2) - 15
2014/15 Everton: 36(4) - 10
2015/16 Everton: 37(1) - 18
2016/17 Everton: 37(1) - 25
Ain Issa camp:
- Established in 2016
- Houses 13,309 people, 2,092 families, 62 per cent children
- Of the adult population, 49 per cent men, 51 per cent women (not including foreigners annexe)
- Most from Deir Ezzor and Raqqa
- 950 foreigners linked to ISIS and their families
- NGO Blumont runs camp management for the UN
- One of the nine official (UN recognised) camps in the region
Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Results
%3Cp%3E%0D%3Cstrong%3EElite%20men%3C%2Fstrong%3E%0D%3Cbr%3E1.%20Amare%20Hailemichael%20Samson%20(ERI)%202%3A07%3A10%0D%3Cbr%3E2.%20Leornard%20Barsoton%20(KEN)%202%3A09%3A37%0D%3Cbr%3E3.%20Ilham%20Ozbilan%20(TUR)%202%3A10%3A16%0D%3Cbr%3E4.%20Gideon%20Chepkonga%20(KEN)%202%3A11%3A17%0D%3Cbr%3E5.%20Isaac%20Timoi%20(KEN)%202%3A11%3A34%0D%3Cbr%3E%3Cstrong%3EElite%20women%3C%2Fstrong%3E%0D%3Cbr%3E1.%20Brigid%20Kosgei%20(KEN)%202%3A19%3A15%0D%3Cbr%3E2.%20Hawi%20Feysa%20Gejia%20(ETH)%202%3A24%3A03%0D%3Cbr%3E3.%20Sintayehu%20Dessi%20(ETH)%202%3A25%3A36%0D%3Cbr%3E4.%20Aurelia%20Kiptui%20(KEN)%202%3A28%3A59%0D%3Cbr%3E5.%20Emily%20Kipchumba%20(KEN)%202%3A29%3A52%3C%2Fp%3E%0A
Tenet
Director: Christopher Nolan
Stars: John David Washington, Robert Pattinson, Elizabeth Debicki, Dimple Kapadia, Michael Caine, Kenneth Branagh
Rating: 5/5
Killing of Qassem Suleimani
MATCH INFO
Quarter-finals
Saturday (all times UAE)
England v Australia, 11.15am
New Zealand v Ireland, 2.15pm
Sunday
Wales v France, 11.15am
Japan v South Africa, 2.15pm
UAE currency: the story behind the money in your pockets
Profile of Udrive
Date started: March 2016
Founder: Hasib Khan
Based: Dubai
Employees: 40
Amount raised (to date): $3.25m – $750,000 seed funding in 2017 and a Seed round of $2.5m last year. Raised $1.3m from Eureeca investors in January 2021 as part of a Series A round with a $5m target.
Married Malala
Malala Yousafzai is enjoying married life, her father said.
The 24-year-old married Pakistan cricket executive Asser Malik last year in a small ceremony in the UK.
Ziauddin Yousafzai told The National his daughter was ‘very happy’ with her husband.
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
