Saudi Arabia announces rise in oil reserves

An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield operated by Saudi Aramco in Manifa Saudi Arabia on Wednesday Oct. 3 2018. Bloomberg

An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield operated by Saudi Aramco in Manifa Saudi Arabia on Wednesday Oct. 3 2018. Bloomberg

Saudi state oil giant Saudi Aramco plans to issue its first worldwide bonds in the second quarter of 2019, the country's energy minister Khalid Al-Falih said Wednesday, Kallanish Energy reports.

The falling inventories came amid rising crude imports, which recorded an average of 7.8 million barrels per day (bpd) last week, the report said.

He also announced a further 100,000 bpd cut in February.

Saudi Arabia attempted to assure the market that the production curbs by the OPEC+ coalition will be in place, stating that the world's top oil exporter has already curtailed its output.

Falih said Saudi Arabia's oil production has fallen to 10.2 million barrels per day, from 11 million last May.

"This certification underscores why. we believe Saudi Aramco is the world's most valuable company and indeed the world's most important", Al Falih said in a statement, which made no mention of the IPO.

Mr Al-Falih played down chatter in the market that Aramco would fund the entire US$70 billion Sabic deal with the bond offering. "We have seen peaks and drops in prices (that are) completely unjustified by the fundamentals".

After Brent crude hit Dollars 85 a barrel in early October, prices dived more than 40 per cent over the following two months due to oversupply and fears of a trade war between the United States and China that could slash energy demand.

They have partially rebounded in the past few days after a new deal came into effect, under which Opec and non-Opec oil producers agreed to trim output by 1.2 million bpd.

In December, the Organization of Oil Exporting Countries chose to reduce oil supply by 1.2 million barrels starting January. The global benchmark crude traded at a premium of $8.74 a barrel to West Texas Intermediate for the same month.

But on Wednesday, Brent crude for March delivery hit US$60, up 20 per cent on the figure two weeks ago, prior to a deal between Opec members and other major producers to cut output from Jan 1. "The results point out that the Kingdom's reserves of oil and gas are bigger than what we have been announcing", Falih asserted.

Saudi Arabia's gas reserves were also revised upward to 325.1 trillion standard cubic feet from 307.9 trillion. In DeGolyer's view, these contained 213.1 billion barrels of proved oil reserves, compared to 210.9 billion as estimated internally by Aramco.

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