A box of Pandora?
Amongst the many issues in this update there was one item which caught the attention because of its possibly
far-reaching consequences. The article was found in a South-African newspaper and was about something that was
happening in Russia: a challenge to the reserve estimates that some companies use, especially to boost up their
share-price.
The reserve estimates came from one of the most famous reserve-estimates companies in the world, a US company, and
its estimates are being used all over the world. And now they are being challenges as being “modified” to
serve other purposes than that for which they are meant to be used, namely reserve-estimating.
Of course this can easily be done away with as another political game from the Russian authorities to increase their grip on their resources, but wait: wasn”t there a few months ago a similar news-article from Bolivia, who threw the company responsible for reserve-estimates out of the country for “dangerously overstating reserves”?
Of course again this can be looked at in a political way and be done away with as a political or populist act of a country wanting to get a greater grip on its own resources.
But is it?
What if it is true? What if indeed many reserves only exist on the papers that are meant to transport the possible financial value or the possible revenue-stream of the future?
We might have another problem next to the peak oil and peak gas; we may have the problem of gas and oil that is counted but never existed. And if we look at the “Whodunnit” we may come again back to the mentioned, and famous, company that was accused and see that a very large part of the estimated reserves, all over the world, have been estimated by this company and that apparently this practice is more-or-less generally accepted. So the problem might be bigger than we easily can do away with.
After we had decades of wild estimates of possible reserves in politically sensitive areas, just to serve political
reasons, now we may have wild estimates of possible reserves that will end up where the other wild estimates also
ended up; in the dustbin.
And if we look at the scale this has been happening, we may end up realising that an early opening up of the box of
Pandora might be a blessing, because with some things it is better to know them early.
So, my question to all oil-companies and share-holders: how sure are you about your reserve-estimates?
I will look forward to answers and comments.
Alexander
