Saudi Arabia to slash oil exports by 800,000 barrels per day

Khalid Al-Falih

Khalid Al-Falih

Top oil exporter Saudi Arabia announced a slight rise in its crude oil reserves on Wednesday after they were independently audited.

Saudi Aramco is getting ready to issue a bond in the second quarter of 2019 to help it finance the acquisition of a majority stake in petrochemical giant Sabic, and this debt issue would force Saudi Arabia's state oil firm to disclose its financials and oil reserves for the first time in decades, Bloomberg reports.

Addressing a press conference on Wednesday, Minister Khalid al-Falih said that the latest audit "confirms our belief that Aramco is the most valuable company in the world".

"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. "We have seen peaks and drops in prices (that are) completely unjustified by the fundamentals". It is the third biggest producer after the United States and Russian Federation with around 10.6 million barrels per day. But prices have partially rebounded in the past few days after a new deal, in which Opec and non-Opec oil producers agreed to trim output by 1.2 million bpd, came into effect in January.

That figure is "more than sufficient to bring balance to the market", said Falih, adding that the production cut would trim excess supply.

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That the carbon intensity of Saudi Arabia's oil and corresponding gas flaring are among the very lowest in the world, and he called on the industry to use this metric alongside profitability.

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).

So, including the D&M revision of oil reserves in the Saudi Aramco's concession area, the Kingdom's total proven oil and gas reserves as of year-end 2017 would have been about 266.1 billion barrels of oil and 324.4 trillion standard cubic feet of gas.

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 demand was high, at $27 billion, according to HSBC.

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