Saudi Arabia Opens the Hood on its Reserves
The volume of oil reserves in Saudi Arabia has interested me, ever since I covered oil and gas in the Middle East. There were often disputes about the oil reserves in the region, and that the current estimates were not believable. How much does Saudi Aramco administer? How much will it fetch for its planned IPO? This article that appeared in the Wall St Journal, on 26 January, sums up recent activities.
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By Michael Amon SAUDI ARAMCO HIRES AN ASSESSOR TO AUDIT CRUDE RESERVES AHEAD OF IPO Saudi Arabia’s state-owned oil company plans to open a window onto a closely guarded industry secret—the size of its crude-oil reserves. Saudi Arabian Oil Co., known as Saudi Aramco, has hired UK energy consultant Gaffney Cline to assess its reserves ahead of the company’s blockbuster initial public offering, write Summer Said and Bradley Olson, the first to report the exclusive news. The audit is essential for the IPO and is also meant to put an end to skepticism about the size of the oil wealth that Aramco manages for Saudi Arabia. The company says it oversees about 261 billion barrels of the kingdom’s stated 266 billion barrels of reserves. However, those numbers haven’t changed much since the 1980s despite the fact that the kingdom hasn’t declared major new discoveries recently and pumps over 3 billion barrels a year. Gaffney Cline won’t confirm the company’s stated numbers but will instead assess how long the company’s reserves could last. In a recent bond prospectus, Saudi Arabia said the kingdom’s reserves would last 70 years if pumped at an average of 10.2 million barrels a day. Gaffney Cline’s assessment could give investors more confidence in Aramco’s value. The IPO of about 5% of the company is expected to fetch between $100 billion and $150 billion, which would be the biggest listing ever. |
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