As crude prices recover, oil majors face a dilemma – how quickly should they seek to replenish reserves?
It’s the same question the cyclical oil industry has tackled many times before: go too fast and risk spending too much for little reward, go too slowly and your rivals will be better positioned to grab market share should oil prices rise.
New data revealed by a Reuters analysis shows the oil and gas reserves of global majors have fallen sharply.
Reserve life – the number of years that a company can keep production stable with its reserves – has decreased for Exxon Mobil, Shell, Total and Statoil, according to the Reuters analysis of the firms’ annual reports.
BP and Italy’s Eni saw a slight increase. (tmsnrt.rs/2nGfmte)
In the case of Exxon, the world’s top publicly listed oil company, reserve life dropped in 2016 to 13 years, the lowest since 1997, after it wrote down Canadian oil sands.
Shell has its lowest reserve life since 2008 despite buying rival BG last year.
In the past, the trend may have caused alarm among investors.
But, focused on stock market returns, investors have clear advice: be cautious, do not overspend.