World Oil Resources and Reserves:-

The question of oil resources and reserves is clouded by a certain degree of technical terminology,  as well as controversy and confusion.The main problems can be summarized as follows:

• Oil resources generally refers to the total oil thought to exist in the ground regardless of recoverability.It is therefore not a good guide to future energy supplies.
• Initial reserves is the estimate of recoverable oil after drilling, given the use of a specific level of
technology and at a certain price.
• Proven reserves is the amount for which there is a 90 percent probability of extraction being achieved at that level of technology and at a certain price
• Proven + probable reserves is the amount for which there is a 50 percent probability of extraction being achieved at that level of technology and at a certain price
• Proven + probable + possible reserves is the amount for which there is a 10 percent probability of extraction being achieved at that level of technology and at a certain price
• Further, natural gas liquids or non-conventional  oil are sometimes reported as reserves, although the definition of conventional oil has now evolved to exclude tar sands, heavy oil,deepwater and polar oil.

From the above, it can be seen that oil reserves may grow or shrink with time, as technology, economic circumstances, or definitions change. Summing the reserves of the oil-producing countries will almost certainly result in an unjustifiably high total.

 The main reasons for this are:

• Different countries have different reporting systems for reserves. The data necessary for detailed analysis and statistical processing are held by the oil companies, or by Petroconsultants of Geneva.
• These data are not generally available to economists, or even to those who participate in the  United States Geological Survey  Delphi estimations.
• Countries and oil companies sometimes overestimate or underestimate reserves for a variety of economic and political reasons. To a certain extent these adjustments cancel out, but are unpredictable.   

As a consequence of smaller and smaller fields being discovered in increasingly inconvenient locations:

• Extraction  and transport costs will rise. The huge oilfields of the Middle East are economic at less  than US$5/b, whereas many of the world's newer fields  are economic in the range US$15-US$20/b price range.
• The energy profit ratio will fall. EPRs for the extraction of oil and gas in the Unites States fell from about 27 in 1920 to around 7 in the early 1980s. Once EPRs approach one, almost no oil will be extracted, no matter how much remains in the ground.