Usually, when people think about a country being energy-rich, two words come to mind: oil production.
If a country can churn out huge volumes of oil, then it’s generally thought to be an energy powerhouse. Sound about right?
Take Saudi Arabia for example. This nation produces over 11 million barrels of oil a day and is widely accepted to be the undisputed king of energy.
But as I’m about to explain, that’s wrong. Dead wrong…
You see, there’s a more important fundamental — one that trumps production and reveals a nation’s true energy bounty. And that’s a country’s total energy reserves (not just oil).
To calculate that, you need to take each nation’s reserves of oil, natural gas, and coal reserves, and convert them into a common denominator such as total thermal generation capacity, or BTU’s (as a good frame of reference, one quadrillion BTU’s is roughly 173 million barrels of oil).
Thankfully, most of the legwork is already done.
Each year, BP publishes its World Statistical Review of World Energy report. Inside, the report goes into detail of the energy reserves of the world’s most energy-rich nations and ranks them.
The most recent release came out in June and the findings may surprise you.
In fact, shockingly Saudi Arabia didn’t even make the top five energy rich nations!
Without further ado, here are two of today’s top five energy heavyweights (and the Saudi shocker)…
6) Saudi Arabia – 1,775.77 QBTU
290.8 Tcf gas
0 MT coal
Saudi Arabia remains the Middle East’s oil king – it generated nearly $982 billion in net oil export revenues, a 5% jump from 2011.
But in the last few years, we’ve seen its clout soften somewhat.
In some circles, including Saudi Prince Alwaleed bin Talal himself, there are fears that the US energy revolution could curtail Saudi Arabia’s energy industry in the years ahead.
OPEC has forecasted a drop in global demand of 300,000 bpd by 2014.
Production notwithstanding, Saudi Arabia’s sheer oil resources will make it difficult for the other major petroleum nations like Qatar and Iraq to overtake them in the global rankings anytime soon.
And despite some production slowdown, Saudi Arabia is still a very active region.
Though much of the E&P projects are led by state-owned Saudi Aramco, contractors such as Halliburton (NYSE:HAL) and Schlumberger (NYSE:SLB) are being tapped to build new drilling rigs.
In recent estimates by the two oil service companies, Saudi Aramco will use a record 170 rigs by the end of 2013 to extract more supplies from older deposits. With demand like that, these are two stocks worth looking at.
5) Venezuela – 1,867.78 QBTU
196.4 Tcf gas
479.0 MT coal
Venezuela saw a slight increase in natural gas reserves from last year, while oil and coal reserves remain unchanged.
Despite the lingering tension following President Maduro’s controversial election win in April, Venezuela is still managing to advance a number of its natural resource projects.
Last month, the first section of a US$2.3 billion 470km gas pipeline commenced operation.
State-controlled energy company PDVSA also recently signed a technology cooperation agreement with Russia’s Gazprom to share technology and E&P techniques.
Furthermore, a cooperation agreement with China came into effect which will see China work with Venezuela in land planning for hydrocarbons, petrochemicals, and mining.
PDVSA is also in talks with Trinidad and Tobago on developing the 1.8 Tcf Loran Manatee gas field which sits between the two countries.
In addition, PDVSA is working alongside Argentina’s state-controlled YPF and Chevron Corp. (NYSE:CVX) to operate the Deltana Platform. The gas fields where Deltana is positioned in is believed to hold approximately 7 Tcf of gas pay.
The completion of the Deltana project is expected to lead to the creation of Venezuela’s first LNG terminal.
Chevron is one of the most involved public energy firms in Venezuela. After lending PDVSA $2 billion to raise production at the Petroboscan project, and with its key role in the Deltana Platform, it’s definitely a stock to own (if you recall I recently named Chevron one of the best oil stocks to buy in an article here).
4) Iran – 2,095.03 QBTU
1,187.3 Tcf gas
0 MT coal
Iran comes in fourth place as it topped Russia last year to have the world’s largest natural gas reserves.
Its flagship gas field is the South Pars play – which is the world’s largest natural gas condensate field.
The International Energy Agency (EIA) estimates that the field holds a mind-boggling 1,800 trillion cubic feet of in-situ natural gas and 50 billion barrels of natural gas condensate.
Currently South Pars is producing 300 million cubic meters per day (10.6 bcf/day), and the project has just undergone some major expansion. New phases are expected to begin production between the end of August and end of September 2013.
The new phases of the project will raise Iran’s production capacity by around 150 million cubic meters per day (5.2 bcf/day).
Around the same time that the new phases come online, the newly built Shoorijeh gas storage facility will become operational with the capacity to store 4.6 billion cubic meters (162.4 bcf) of gas.
Opening of the new facility will leapfrog Iran into fifth place in global gas storage capacity from its current 19th ranking.
Though current sanctions have placed a moratorium on US projects, a slew of countries continue to make inroads in Iran, including China, South Korea, and India.
Korea’s Daelim Industrial Co. (KRX:000210) constructed one of the phases in South Pars that’s due to open this month.
Daelim has two other South Pars phases under construction as well as an LNG plant at Tombak that will soon handle 5.4 million tons of LNG per year from South Pars.
With so many high-profile projects on the go just in Iran, Daelim is one stock to look at if your broker allows you to purchase foreign stocks.
Part 2 of this article will be released this Friday (August 9, 2013). Don’t miss it.
View part-2 of this series here.