The table below (from this Oil Drum post), points out that global net exports of oil have been falling in 2006 and 2007.  That’s interesting, even dramatic information because it seems to go a long way to explaining why oil prices have been rising.  It also validates a position Matt Simmons has taken that shrinking global inventories are primarily the way that the world has been adjusting to demand outrunning supply in recent years. 

Another interesting exercise is to look at the net exports of the “million barrel club” - those countries that export in excess of one million barrels per day - and divide them into those which can be expected to grow their exports in the coming couple of of years and those which are more likely to have shrinking exports.  I put the following countries in the “growth” category:

Saudi Arabia:  7923

Algeria:           1862

Angola:           1707

Libya:              1552

Iraq:                 1484

Khazakhstan:   1193

Canada:           1010

   Total:          16,731

In the “decline” camp (remember, this is exports, not production), I would put:

Russia:        7018

Norway:      2321

Iran:             2298

Kuwait:        2268

Nigeria:        2040 (recognizing it would be possible to reverse this estimate based on political changes)

Venezuela:   2024

Mexico:        1456

   Total:       19,425

Excluded are UAE and Qatar, both of which had increasing exports in 2006 and declining exports in 2007.  I assume their oil exports over the next couple of years will be about the same, although that might be optimistic.

This grouping of the 14 top exporting countries, which includes 88.4% of all oil exports (including UAE and Qatar), suggests that more oil exports come from countries likely to have declining exports in the future than from countries likely to increase them.  That suggests the likelihood that there will be continuing lower net exports available to supply oil importers in the coming years. 

Note that Saudi Arabia (KSA) is the key here, as it is generally considered to be.   KSA’s exports are expected (by me) to increase in 2008 and 2009 because of the two new fields with total peak estimated flows of 1.7 mb/d that they are bringing on stream this year and next.  If KSA were to begin to reduce their exports world oil supply would clearly fall very substantially behind demand.  KSA might well begin reducing exports some time after 2010 and could need to do so sooner if their Ghawar field were to go into decline.

Note also that oil exporters have a strong tendency to reduce their exports because their economies are enjoying huge financial gains from high oil prices and such gains are fueling substantial growth rates in many of these countries.  At the same time, most of them are relatively poor countries that have very low oil use per capita and the price of oil in these countries is generally kept low through government subsidies.  Thus, as these countries’ GDP grows rapidly, so does their internal use of oil.  That fact suggests that exporters which cannot grow their oil production rapidly - or choose not to do so - must reduce their exports to accommodate the growing oil needs of their own economies.

Tags: Add new tag, peak oil energy investments, Price of oil

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