(EnergyAsia, June 29 2017, Thursday) — Saudi Arabia’s hopes for a lofty market valuation of soon-to-be-listed state energy firm Aramco has been boosted by a consulting firm’s decision to raise the kingdom’s recoverable oil reserves by more than 26%.
Cash-strapped Saudi Arabia is planning to sell a small stake in Aramco, believed to be around 5%, through a public listing on some of the world’s top stock exchanges in 2018. The market is greatly divided over the company’s worth, ranging from a low of US$400-billion according to some analysts to a high of US$2-trillion as touted by Saudi officials.
In its annual report on global oil reserves, Norwegian consulting firm Rystad Energy has elevated Saudi Arabia to the top to narrowly beat off the US into second spot. Saudi Arabia is assessed to have held 276 billion barrels of recoverable petroleum crude in the ground in 2016, up from 203 billion barrels the previous year.
“The addition of 73 billion barrels of recoverable oil comes as a result of lower tax rates for Saudi Aramco. The revised fiscal regime should incentivise more aggressive exploration and development drilling in the country,” said the Oslo-based firm.
With an eye to helping Aramco’s listing, the Saudi government recently announced a reduction in the company’s tax rate from 85% to 50%, applied retroactively to January 1 2017.
The US added only 13 billion barrels to raise its recoverable reserves to 263 billion barrels, while third-placed Russia did not improve on its 181 billion barrels from 2015, said Rystad.
The company said that if natural gas liquids (NGLs) were included, the US would surpass Saudi Arabia by more than 50 billion barrels of recoverable oil and petroleum liquids.
Rystad downgraded the recoverable reserves of the Middle East’s remaining five OPEC members.
Kuwait suffered the group’s biggest reduction of 10 billion barrels to 46 billion barrels while the UAE had the smallest cut of two billion barrels to leave it with 50 billion barrels. Qatar held 44 billion barrels after “losing” five billion barrels.
Iran’s reserves were slashed by seven billion barrels to 135 billion barrels while Iraq’s were off by four billion barrels to 110 billion barrels.
The bulk of the reserves downgrade took place in the “contingent resources” component as Rystad regards their recoverability as most at risk of political and economic uncertainties.
BP ranks Saudi Arabia’s reserves as second largest
BP, the industry’s pioneer in publishing global energy data, has released a vastly different table that shows Venezuela holding the world’s largest reserves of more than 300 billion barrels and Saudi Arabia in second place with 266 billion barrels. Canada is third with 171.5 billion barrels while the US has only 48 billion barrels.
Compared with Rystad, BP offers a more generous assessment of the reserves of Iran (158.4 billion), Iraq (153 billion) and Kuwait (101.5 billion barrels).