OIL WARS

A battle against shrinking reserves

The Middle East, which looked like a promising place to acquire oil reserves in 2003, turned out to be a disappointment. Companies are turning to more difficult areas, such as natural gas fields far from the markets they will serve, and heavy crude oil, which is expensive and environmentally controversial.
In the past three years, oil companies have discovered less than half the reserves found between 1998 and 2000. If one sees an oil company's reserves as a measure of its health -- as many do -- the industry is ill, with high oil prices masking the problem.
BP and its biggest competitors must find fields the size of the North Sea every 18 months just to stop their reserves from shrinking. That task is becoming increasingly difficult.