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APRIL 5, 2004
Aramco: Behind The Numbers What does Saudi Aramco mean when it says it has 260 billion barrels of proved reserves of oil? Saudi Aramco uses the definition of the Society of Petroleum Engineers (SPE) and other groups. In summary, the SPE defines proved reserves as quantities of oil that are "reasonably certain" of recovery. The organization says there should be a 90% probability that the amounts produced will equal or exceed the estimate. Various methods are used to scope out the reserves, including drilling to delineate reservoirs and measures of flow rates from wells. The problem with Saudi Aramco's data is that there is no independent auditor to vouch for them. Moreover, reserves are viewed by many analysts with suspicion because how much oil a country has in the ground translates into political clout within OPEC. In the 1980s there were big jumps in reported reserves in many OPEC countries, including Saudi Arabia, that were seen at the time as, possibly, political barrels. But Manouchehr Takin, senior petroleum analyst at the Center for Global Energy Studies, a London think tank, doesn't think so. In 1993, Takin undertook a comprehensive study of the Saudi fields from public data and interviews with executives and concluded that the 260 billion bbl. figure was accurate "with a margin of error of 10 billion to 20 billion bbl. on either side." But doubts will linger until a company that specializes in certifying reserves, such as Houston-based Ryder Scott Co., checks it out.  By Stanley Reed in Dhahran, Saudi Arabia Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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