Kuwait has let it be known, through the mouthpiece of an oil industry newsletter, the Petroleum Intelligence Weekly, that its oil reserves are less than half of what had been previously stated. Last week Kuwait possessed 99 billion barrels of oil. This week it has only 48 billion barrels. As Byron King points out in his newsletter Whiskey and Gunpowder, this amounts to a 5% reduction in global oil reserves.
Of course it has been suspected for many years that OPEC countries' oil reserves have been over stated by 50%. This is the first official confirmation. If Saudi Arabia follows suit, it will confirm (Saudi oil magnates' nemesis) Matthew Simmons' thesis that the Saudi kingdom is near peak also.
Why is it in OPEC nations' interest to restate their reserves now? Maybe because times have changed. When these countries overstated their reserves, it was a buyers market in oil. Oil producers were suffering from falling energy prices. A larger reserve base meant a larger production quota, and greater revenue.
Now things are different. All OPEC countries are finding it hard to meet their production quotas for light oil. This stuff has become extremely valuable all of a sudden. Countries that possess large reserves of it have to think about defending their territory against the possibility of invasion. It would be safer to emphasize how little oil a small nation has, rather than how much.
It has also become clear that faster production means that a smaller percentage of the entire oilfeild will be recoverable in the end. Slower production preserves the geological integrity of the oilfeild. Few countries now are trying to maximize their production. Nations are now trying to steward their natural resources carefully, not sell them off as quickly as possible.
Import dependant countries, like the USA, Japan, China, Europe are making increasingly desperate pleas for more oil production, which are mostly going unheard. China is backing up its pleading with very large cash and military protection offers. The USA is mainly backing up its pleading with threat of invasion. When asked, the Saudis typically announce that they will increase production, but they never do. Instead they offer heavy sour oil, of which there is a glut on the maket, and few refineries can process.
I bet more coutries will follow Kuwait's lead in restating official reserves this year.