In 2002, non-OPEC oil production contributed 60.75% of the world’s total oil supply. But technology, competition, and access to capital through listings on stock exchanges have not been able to overcome limits of geology.
Global giants such as Royal Dutch Shell (RDS.A) and Exxon Mobil (XOM) have essentially abandoned the effort to meaningfully expand their oil reserves. Instead, they are now shifting course in favor of a strong, natural gas emphasis.
The result is that Russia in the past decade has accounted for nearly all of the supply growth in crude oil, among non-OPEC producers. Indeed, without Russia, Non-OPEC supply would be in steep decline. Instead, it’s merely flat.
So far in 2011, non-OPEC oil production now accounts for 57.12% of global supply, with nearly 1/4 of that now coming from Russia. Let’s puncture two myths at once here. Do you think the West is going to become oil independent on the backs of Canada, Brazil, North Sea, and United States? No, no, no, and no. Furthermore, from a geo-political standpoint, what does it imply for the West that a decade ago Non-OPEC ex Russia accounted for nearly 50% of world oil supply—but now only accounts for under 44%?
Under the surface of non-OPEC supply, therefore, is not a swing in power towards the West but rather a more pronounced swing back towards the Middle East, and Russia. The implications are obvious: The West, especially the United States, needs to stop investing in liquid-fuel based transport. The march towards electrification, and the resurrection of rail should be our top priority.