Saudis raise oil reserves ahead of Aramco's planned IPO

Andrew Cummings
January 12, 2019

Saudi Minister for Energy, Industry and Mineral Resources Khalid bin Abdulaziz Al-Falih will arrive in Gwadar tomorrow in connection with the Amarco's proposed oil refinery to be set up in the port city.

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.

Despite this, US bank Morgan Stanley cut its 2019 oil price forecasts by more than 10 per cent on Wednesday, pointing to "weakening economic growth expectations" and rising oil supply from outside OPEC as reasons for their lower price forecast. That figure is "more than sufficient to bring balance to the market", said Falih, adding that the production cut would trim excess supply from the market.

For nearly 30 years - despite rising production, large swings in oil prices and improved technology - Riyadh has annually reported the same number for reserves at around 261 billion barrels, according to a statistical review by BP BP.L .

Saudi Arabia aims to work closely with the United States on its plans to build nuclear power generation capacity in the oil producing kingdom, the energy minister said on Wednesday (Jan 9).

He mentioned an announcement "Wednesday by Saudi Arabia that it will cut its exports in January by 10 percent compared with November".

Saudi Arabia has opened up its vast energy reserves to independent auditors for the first time, a move that could help it revive plans to sell shares in state oil giant Aramco.

Gas reserves totalled 325.1 trillion cubic feet (Tcf), an increase of 17.2 Tcf over the previous estimate.

Of these, the estimated proven oil and gas reserves in Saudi Aramco's concession area were 261 billion barrels of oil and 302.3 trillion standard cubic feet of gas.

Saudi Aramco plans to tap the debt market in the second quarter to finance the acquisition of petrochemical giant Sabic, likely issuing its first ever worldwide bond and disclosing its accounts in the process.

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.

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

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