Skip to main content

Oil: Reserves

Volume 464: debated on Tuesday 9 October 2007

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, from which countries he expects the UK to derive its future requirements for oil in the next (a) five, (b) 10 and (c) 15 years. (154350)

Oil is traded in a global market where prices and availability are determined by global supply and demand conditions.

As domestic oil production declines, the UK will continue to rely on the global oil market to source its supplies, allowing companies to have access to a diverse range of suppliers. Commercial reasons, for example geographical proximity, mean that in addition to Norway, Russia and the Middle East, increasing supplies are also likely to be sourced, via the market, from producers in the Caspian region and Africa over the next 15 years.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, what estimate he has made of the duration of future (a) oil and (b) natural gas supply from all known sources from UK-based extractive sources. (154351)

The Department does not estimate the duration of remaining discovered recoverable reserves of oil or gas. Production from the UK Continental Shelf is expected to continue for many years, though at a declining rate.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, if he will assess the merits of reviewing the analysis of those who promote a peak oil perspective of future oil supply. (154352)

The Department will continue to keep abreast of, and to take into account, developing views and analysis surrounding future trends in the oil market, including in relation to future oil supplies.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, what assessment he has made of the implications of recent increases in crude oil prices for his Department’s calculations of oil supply. (154353)

Global investment in oil production capacity has increased in recent years, resulting in an expected increase in future global oil production capacity. Higher oil prices—by increasing the finances available to oil companies and by improving the economics of higher cost projects—are one of the contributory factors but it is not possible to quantify the specific contribution. A range of other factors also interact to determine the level of investment and therefore future global oil supply, including technological developments, governments’ policies, supply chain costs, and other energy prices.

Domestically, the Department publishes projections of UK oil production every six months or so (most recently at http://www.og.dti.gov.uk/information/bb_updates/chapters/Section4_17.htm) and these reflect operators’ views of future oil prices. The projections change for a number of reasons and, once again, it is not possible to attribute a specific contribution from recent increases in crude oil prices.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, what challenges he has assessed as representing the greatest impediment to affordable oil supply to the UK in the next (a) five, (b) 10 and (c) 15 years. (154354)

The 2007 Energy White Paper:

http://www.berr.gov.uk/energy/whitepaper/

sets out the main international (chapter 1) and domestic (chapter 4) challenges facing the UK in ensuring its supplies of oil remain affordable and reliable.

Internationally, the main challenge lies in recovering and bringing oil reserves to market. A number of factors have the potential to defer or restrict the level of future oil sector investment, undermining the affordability and reliability of supplies:

resource nationalism;

inadequate oil market information;

regulatory uncertainty;

the threat of terrorism, accident and natural disaster; and

labour, equipment and service sector constraints.

The Government are promoting international efforts to improve the functioning and transparency of the global oil market, and to tackle these barriers to investment.

Domestically, the main challenge is ensuring that UK oil infrastructure is able to cope with declining UK production and evolving trends in demand. Given the high volumes of oil the UK already imports, existing infrastructure is well placed to cope with higher volumes. However, UK refineries will need to respond to the challenges of:

rising demand for diesel and jet fuel and falling demand for petrol;

declining availability of North sea crude oils; and

evolving qualities of oil products, including the introduction of biofuels.

The Government will continue to work closely with UK refiners as they address these challenges. The Government have also established with industry an aviation fuel task group to analyse what supply infrastructure may be needed to meet future jet fuel demand at UK airports up to 2030. Finally, we have taken steps to ensure our oil emergency stocking system is better placed to deal with the increasing levels of oil import dependence we face.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, how many years of oil supply the Government have estimated are available to (a) the international community and (b) the UK in the forthcoming (i) five, (ii) 10, (iii) 15 and (iv) more than 15 years at present rates of usage. (154355)

The Department’s view is that global oil resources are sufficient to sustain not only current rates of global usage but also the expected increase in usage for the foreseeable future. Supplies will be made available to the international community and the UK through the market mechanism, with the exact level depending on the complex interaction of a number of factors, including technological developments, economic growth, the policies of Governments, and relative energy prices.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 20 February 2007, Official Report, column 658W, on oil: reserves, what assessment he has made of the affordability of oil supplies to the UK in the next (a) five, (b) 10 and (c) 15 years. (154356)

Global oil market tightness is expected to ease slightly over the next few years as new production and refining capacity is brought on-stream. However, given the complexity of contributory factors, the implications for international oil prices are uncertain. However, most analysts do not expect oil prices to make a sustained return to the average levels seen during the 1990s (around US$25 per barrel in today’s prices), reflecting an expected increase in the market share of a relatively small number of producers, strong demand growth from developing countries, investment constraints, and a rise in marginal production costs outside OPEC.