Corrected: Saudi Arabia announces rise in oil reserves after audit

Kenny Grant
January 12, 2019

Saudi Arabia, world's top oil supplier, announced that it would markedly slash oil supply in the recent two months.

The government of Saudi Arabia said in a statement Wednesday that USA energy consultancy DeGolyer & MacNaughton had concluded that its oil reserves total 268.5 billion barrels.

Further easing concerns of global oversupply, U.S. commercial crude oil inventories decreased by 1.7 million barrels from the week ending January 4, the U.S. Energy Information Administration reported on Wednesday, which marked the biggest fall since November 2018.

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

That leaves "spare capacity very low, much lower than the 1.5 to 2 million barrels a day which they used to aim for", said Spencer Welch, oil markets executive director at IHS Markit.

Al-Falih is also the current chairperson of Maaden, a Saudi Arabian mining company and former chairperson of the Saudi oil giant, Aramco. "We are concerned about volatility in the oil market".

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Members of the Organization of the Petroleum Exporting Countries and their partners, who together account for around half of global output, have presided over a supply glut which had sent oil prices tumbling by more than 30 percent between October and December.

The Saudi Energy Ministry said in a statement carried by state news agency SPA that Saudi Arabia's proven oil and gas reserves stood at around 268.5 billion barrels of oil and 325.1 trillion standard cubic feet of gas as of the end of 2017.

"We are serious about restoring balance to the market", Falih said at a press conference in Riyadh. "We have seen peaks and drops in prices completely unjustified by the fundamentals".

According the estimates given by the Board of Investment, Saudi Arabia is likely to invest $5 to $10 billion in the oil refinery and petrochemical complex at Gwadar.

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

The funding program "will be sustained over time as Saudi Aramco grows and undertakes its capital program", al-Falih said.

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