Saudi Arabia to announce slight rise in oil, gas reserves after audit

Daniel Fowler
January 12, 2019

Saudi Arabian Minister of Energy Khalid al-Falih revealed the plan on Wednesday in Riyadh, saying that the company wanted flexibility in funding the Sabic deal, which could cost about US$70 billion.

The Kingdom plans to ship about 7.1 million barrels per day (bpd) in February, down from 7.2 million bpd in January.

Opec and its allies decided last month to cut their overall output by 1.2 million bpd from January, to boost prices hit by a supply glut and fears demand could plummet.

The energy ministry said proven oil reserves stood at 263.2 billion barrels at the end of a year ago, up from the figure of 261 billion barrels that has been used for nearly three decades.

Saudi Arabia had a target to lower output to 10.311 million bpd as of January 1, when the supply cut accord took effect.

The most recent market rumors have had it that Aramco could fund the entire US$70-billion price tag for buying 70 percent in Sabic with the upcoming bond issue.

Saudi Arabia's gas reserves were also revised upward to 325.1 trillion standard cubic feet from 307.9 trillion.

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"We will work with our advisers and find the right time to go to market and part of that would be a prospectus that would have appropriate financial statements and disclosures", al-Falih said, commenting on the plans for the bond sale. It is the third biggest producer after the United States and Russian Federation with around 10.6 million barrels per day.

The Kingdom previously announced that oil and gas reserves were 264 billion barrels of oil and 307.2 trillion standard cubic feet of gas respectively as of December 31, 2017.

Leading consultants DeGolyer and MacNaughton (D&M) conducted the independent certification.

Saudi Arabia's reserves of easily recoverable oil have always been the world's largest.

The Kingdom's share of the Partitioned Zone oil reserves (onshore and offshore combined) is 2.9 billion barrels and the corresponding gas reserves is 4.9 Tcf (Trillion cubic feet).

But the kingdom has posted budget shortfalls each year since a major 2014 crash in crude prices, and has turned to borrowing as well as pursuing economic reforms. "But the trade negotiations between the US and China still add some uncertainty to global financial and oil markets, possibly leading to corrections in prices in the shorter term".

The operation was not fully concluded, so the interest rates have not yet been calculated.

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