Citibank’s recent report “Falling IOC Reserves A Looming Challenge” states that the International Oil Companies (IOCs) have seen their average reserves of oil decrease by 25% since 2015.
Citi said there were two clear groups forming across the oil sector, with six IOCs tightly grouped around reserve life of around 10.5 years. They are: TOTAL, BP, Chevron, ENI, ConocoPhillips and ExxonMobil. There are three IOCs in another group (Repsol, Equinor and Shell) which have reserves of around eight years.
While this may make good headlines it is also an indication how little the underlying energy transition is understood. Firstly, it is rather surprising that Citibank should publish such naive utterances and this from a bank that professes to have a semblance of understanding the basic tenents of the energy transition.
Secondly, what is also surprising is that the financial press have picked up on this story and repeat in chorus what Citibank has told us: oil company reserves are down. Woe be me!
A small history lesson to better understand the shortcomings of the Citibank report.
Given the extreme importance to understand the profound implications for the oil and gas sector, a portion of the USA-based Institute for Energy Economics and Financial Analysis (IEEFA) ’s explanation and analysis is discussed.