Top Ten Producers Equal 61%

Jim Brown
 
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Many people view the world's oil production as though oil was equivalent to trees. Every country has some but the number varies by the size and geography of the country. Unfortunately that is not correct. We are highly dependent on a very few countries. The resources are definitely not distributed evenly.

I would like to thank Steve Andrews of ASPO for doing the detail legwork behind tonight's article. He posted an article to ASPO this week that provided the basis for these comments.

Steve assembled some data from the BP Statistical Oil Review showing what countries had peaked and when as well as the 2010 production.

As you can see in the graphics below we are dependent on the top ten producers for 61% of all oil produced. However, the USA is the number three producer at 7.5 mbpd but we are the number one importer at 11.4 mbpd. (all the numbers are for 2010)

Two of the top ten producers are also importers for a total of 16.39 mbpd. Clearly the biggest potential for a disaster would be something happening to Russia or Saudi Arabia that halted the flow of their 10 mbpd each. That would send prices to the moon instantly.

Russia is big enough to be immune from outside influences but they like to use their energy assets asa weapon and they have cut off natural gas to Europe more than once in the last few years. I could easily see them blackmailing the U.S. or the world for that matter by withholding some production from the market.

Saudi Arabia is more vulnerable than you would think. They are surrounded by unstable countries, terrorists and enemies. Iran would like nothing better than to launch a missile strike and knock their production offline. That would cripple Saudi Arabia and boost oil prices by $100 a barrel within weeks. That means Iran could sell their oil for much more. However, Saudi Arabia has the backing of the U.S. military so that option is off the table for now. Iran and al Qaeda have terrorist cells inside Saudi Arabia and that would be the likely point of disaster if they can organize a coordinated attack on pipelines or export terminals.

Of those top ten producers six have already peaked and are in decline mode.

The top 20 produce 84% of the world's oil. Think about that a minute. Only 20 countries, 19 is you remove the USA, produce 84% of the world's oil. Even worse, ten of those countries have already peaked.

It is those ten countries in the top 20 that have not peaked that will determine our fate in the months ahead. The countries that have peaked are in red.

Iraq was thought to have peaked but since the conditions have changed they are expected to make a serious effort at boosting production to a new high. Early claims about massive production expectations are starting to fade due to worse than expected conditions from fields that were seriously abused under Saddam Hussein.

The numbers on the graphic came from BP and cover the changes from 2009 to 2010. Remember 2009 saw production decline globally because of the recession and the sharp drop in demand. When demand returned we saw production rebound +2.2% to just over 82 mbpd. The numbers in green showing gains from 2009 are not all new production. They are simply production increases over the sharp drop in 2009. There is some new production there but very little.

Top 30 Global Producers

31-50 Global Producers

There is a lot of red ink on those graphics and it really makes you realize how dependent we are on a very few countries and many don't particularly like us.

Jim Brown

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