KUALA LUMPUR (April 13): The average reserves of oil majors have fallen since 2015 by 25% to now stand at less than 10 years of annual production.

Citing a report from investment bank Citi titled “Falling IOC Reserves A Looming Challenge”, Forbes yesterday said that international oil companies (IOCs), such as Shell, Exxon and Chevron, are looking at a major decline in reserve/production life spans.

Citi said years of under-investment in exploration and a decline in project development had blown a hole in the reserves of major IOCs.

Citi said that the picture is one where reserve life had fallen yet again.

“The IOC average of 9.5 years is now 25% below where the industry was prior to the oil price collapse in 2015.

The Citi report said that a reserve life of under 10 years gives an important reference on these time frames.

Citi said there were two clear groups forming across the oil sector, with six IOCs tightly grouped around reserve life of around 10.5 years. They are: Total, BP, Chevron, Eni, ConocoPhillips and ExxonMobil.

There are three IOCs in another group (Repsol, Equinor and Shell) which have reserves of around eight years.

According to Citi, low oil prices are the primary driver behind this growing problem.

“There is no circumventing this relationship between reserves and earnings, so we believe that analysing reserve trends is an extremely important indicator of a company’s health,” said Citi.