54 PETROLEUM TECHNOLOGY, ECONOMICS, AND POLITICS
reserve-growth concept. In fact, the concept could be applied even
to the undiscovered resources with some qualifications as to the
inherent risk.
The system of country production quotas was introduced in
the 1980s, partly based on reserves levels, and there have been
dramatic increases in reported reserves among OPEC producers.
In 1983, Kuwait increased its proven reserves from 67 x 10
9
barrels
to 92 x 10
9
barrels. In 1985-86, the United Arab Emirates almost
tripled its reserves from 33 x 10
9
barrels to 97 x 10
9
barrels. Saudi
Arabia raised its reported reserve number in 1988 by 50%. From
2001 to 2002, Iran raised its proven reserves by some 30% to 130 x 10
9
barrels, which advanced it to second place in reserves and ahead of
Iraq. Iran denied accusations of a political motive behind the readjustment, attributing the increase instead to a combination of new
discoveries and improved recovery. No details were offered of how
any of the upgrades were calculated, leaving doubt about the validity of these new reserve estimates (Campbell, 1977; Campbell and
Laherrère, 1998).
The sudden revisions in OPEC reserves, totaling nearly 300 x 10
9
barrels, were surprising; this increase is partly defended by the shift
in ownership of reserves away from international oil companies —
some of whom were obliged to report reserves under conservative
US Securities and Exchange Commission rules.
All major OPEC oil producing countries increased their reserves
considerably, despite the fact that there were no new corresponding
discoveries reported in this period. The reason given for the re-evaluation of reserves was that the reserve assessments in the past were
too low. This may be justifiable because before the nationalization
of the oil industry in these countries, private companies perhaps
had a tendency to under-report reserves for financial and political reasons. In addition, OPEC production quotas are set according
to reserves and also other factors which give an incentive for each
country to defend their quota by keeping up with reserves. Such
reserves are referred to some critics as political reserves in this context (Zittel and Schindler, 2007).
In any event, the revisions in official data had little to do with
the actual discovery of new reserves. Total reserves in many OPEC
countries hardly changed in the 1990s. Official reserves in Kuwait,
for example, were unchanged at 96.5 x 10
9
barrels even though
the country produced more than 8 x 10
9
barrels, and they did not
make any important new discoveries during that period. The case
reserve-growth concept. In fact, the concept could be applied even
to the undiscovered resources with some qualifications as to the
inherent risk.
The system of country production quotas was introduced in
the 1980s, partly based on reserves levels, and there have been
dramatic increases in reported reserves among OPEC producers.
In 1983, Kuwait increased its proven reserves from 67 x 10
9
barrels
to 92 x 10
9
barrels. In 1985-86, the United Arab Emirates almost
tripled its reserves from 33 x 10
9
barrels to 97 x 10
9
barrels. Saudi
Arabia raised its reported reserve number in 1988 by 50%. From
2001 to 2002, Iran raised its proven reserves by some 30% to 130 x 10
9
barrels, which advanced it to second place in reserves and ahead of
Iraq. Iran denied accusations of a political motive behind the readjustment, attributing the increase instead to a combination of new
discoveries and improved recovery. No details were offered of how
any of the upgrades were calculated, leaving doubt about the validity of these new reserve estimates (Campbell, 1977; Campbell and
Laherrère, 1998).
The sudden revisions in OPEC reserves, totaling nearly 300 x 10
9
barrels, were surprising; this increase is partly defended by the shift
in ownership of reserves away from international oil companies —
some of whom were obliged to report reserves under conservative
US Securities and Exchange Commission rules.
All major OPEC oil producing countries increased their reserves
considerably, despite the fact that there were no new corresponding
discoveries reported in this period. The reason given for the re-evaluation of reserves was that the reserve assessments in the past were
too low. This may be justifiable because before the nationalization
of the oil industry in these countries, private companies perhaps
had a tendency to under-report reserves for financial and political reasons. In addition, OPEC production quotas are set according
to reserves and also other factors which give an incentive for each
country to defend their quota by keeping up with reserves. Such
reserves are referred to some critics as political reserves in this context (Zittel and Schindler, 2007).
In any event, the revisions in official data had little to do with
the actual discovery of new reserves. Total reserves in many OPEC
countries hardly changed in the 1990s. Official reserves in Kuwait,
for example, were unchanged at 96.5 x 10
9
barrels even though
the country produced more than 8 x 10
9
barrels, and they did not
make any important new discoveries during that period. The case