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Page added on May 1, 2018

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Audit Puts Aramco’s Oil Reserves At 270 Billion Barrels

Geology

An international independent audit of the oil reserves of Saudi Aramco has more than confirmed the official figures released by Riyadh for three decades, putting the number at 270 billion barrels, two unnamed sources close to the company told Reuters.

The audit was conducted by companies including DeGolyer and MacNaughton, and Baker Hughes’ Gaffney, Cline, and Associates. It is being watched closely because the reserve base of the company will have a direct bearing on its valuation ahead of the much-hyped initial public offering.

The figure may come as something of a surprise because for thirty years, Aramco has been reporting unchanged reserves of about 261 billion barrels despite active production. Yet barrels are not the only factor considered in an oil company’s valuation as Bloomberg Gadfly’s Liam Denning noted in an analysis earlier this year, even though they are an important indicator of the company’s long-term viability and profitability.

Also Bloomberg this month took a look at Aramco’s accounts, reporting that the company booked a net profit of US$34 billion for the first half of 2017. The significance of the figures was naturally questioned by skeptic analysts aware that balance sheets can be adjusted to present the information about a company’s performance in the most favorable way.

Bloomberg itself made a note of pointing out that despite Aramco’s negligible debt levels and super-low production costs, the company is Saudi Arabia’s cash cow: cash flow is not great because such a large part of the Saudi economy and society literally depend on Aramco.

Interestingly enough, Aramco said the numbers were inaccurate, adding that they were mere speculation.

The company is also understandably sensitive to oil prices, which is why Saudi officials have been pushing so vehemently for higher oil prices ahead of the IPO. Now they seem to be aiming for US$100 a barrel as the IPO, according to Crown Prince Mohammed, should take place in late 2018 or 2019.

OilPrice.com

 



13 Comments on "Audit Puts Aramco’s Oil Reserves At 270 Billion Barrels"

  1. dissident on Tue, 1st May 2018 6:57 pm 

    Yeah, right. The same reserves for the last 30 years. BS propaganda.

    How the frell would an accounting firm objectively determine KSA’s physical resources? It is simply impossible, they just went through Aramco’s faked up reserve estimates and did not find any brain dead contradictions.

    The terrorism exporting Saudis get way too much gentle treatment and benefit of the doubt from the west.

  2. MASTERMIND on Tue, 1st May 2018 7:01 pm 

    Dissident

    Saudi Arabian oil reserves are overstated by 40% – Wikileaks
    https://www.theguardian.com/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

    Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead
    https://www.wsj.com/articles/saudi-minister-sees-end-of-oil-price-slump-1476870790

    Saudi Aramco chief warns of looming oil shortage
    https://www.ft.com/content/ed1e8102-212f-11e7-b7d3-163f5a7f229c

    Saudi Arabia ‘may run out of oil to export by 2030’
    https://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9523903/Saudis-may-run-out-of-oil-to-export-by-2030.html

    The collapse of Saudi Arabia is inevitable
    http://www.middleeasteye.net/columns/collapse-saudi-arabia-inevitable-1895380679

  3. Boat on Tue, 1st May 2018 8:26 pm 

    In the largest two fields they keep drilling and keep finding more oil. Texas and the Saudi. Texas oil and it’s recent jump in both production and proved preserves changed history. What’s next on the horizon? Renewable energy so cheap that tar sands takes off as well?

  4. Antius on Wed, 2nd May 2018 6:25 am 

    The Saudis have produced an average of 8m bl/day since 1973.
    https://tradingeconomics.com/saudi-arabia/crude-oil-production

    That amounts to 131billion barrels produced in 45 years – maybe 150billion in total production since the beginning of the 20th century.

    This suggests that Saudi is only about 1/3rd of the way through its reserves. If the Saudis maintain production at 10m bl/day, they will hit the midpoint of their reserves in another 16.5 years or the end of 2034. A peak in Saudi oil production does not appear to be imminent. These people will continue to produce oil and other poisons for many decades to come.

  5. CAM on Wed, 2nd May 2018 7:06 am 

    That they have reserves of 270 billion barrels is certainly doubtful. But the more pertinent question is at what cost can they produce this oil. As reservoirs drain and water-cut increases so does the cost. It is certain that the oil that they have already produced is the cheapest and easiest to get. From here on it becomes more costly and difficult. And the quality of the oil itself may diminish.

  6. Jef on Wed, 2nd May 2018 9:19 am 

    Audit Puts Aramco’s Oil Reserves At 270 Billion Barrels and climbing.

  7. MASTERMIND on Wed, 2nd May 2018 10:06 am 

    Antius

    Saudi peak 2027. Peak OPEC 2028

    Forecasting OPEC crude oil production using a variant Multicyclic Hubbert Model (Ebrahimi 2015)
    https://www.sciencedirect.com/science/article/pii/S0920410515001539

  8. rockman on Wed, 2nd May 2018 10:58 am 

    dis – “…they just went through Aramco’s faked up reserve”. And that’s the critical question: what’s the difference between a reserve audit and a reserve evaluation? I’ve done hundreds of reserve evaluations over the last 4 decades but not one reserve audit.

    But that depends on how one defines the two processes. The problem with even a full reserve evaluation not once have I used production data from the company I was evaluating. I used data that had been submitted to the regulating agency by the company. Data that had been verified by various efforts.

    The KSA has never made its production data available. In fact, doing so has always been an act of treason. So until anyone of the auditing companies at least make the data that data public there’s no way to measure confidence. At the very least those companies need to describe their auditing process.

  9. Antius on Wed, 2nd May 2018 11:12 am 

    “I used data that had been submitted to the regulating agency by the company. Data that had been verified by various efforts.”

    Interesting. This suggests that the 270bn bl reserve figure isn’t worth the paper its printed on.

    The fact that the Saudis are willing to sell any part of Aramco raises suspicions in my mind. Remember what Warren Buffett said about the right time to sell a good business?: Never.

  10. Sissyfuss on Wed, 2nd May 2018 11:18 am 

    It would not be beneath the Saudsacks to bribe any and all audit companies to guarantee and possibly inflate the price of their upcoming IPO. It’s just good business practice by the Wahabi lobby.

  11. jawagord on Wed, 2nd May 2018 2:37 pm 

    In 2005 when Matt Simmons’ book Twilight in the Dessert was published, SA was producing 9.5 mmBPD, 13 years later SA is producing 10.2 mmBPD. I’m inclined to give the Saudi’s the benefit of the doubt on reserves as clearly they have much more than what Simmons speculated they had back in 2005.

  12. Darrell Cloud on Thu, 3rd May 2018 6:58 am 

    I know nothing about oil production except what I have read. So, I ask this question from a position of ignorance. When calculating the number of barrels produced is the water cut subtracted from the raw product or is it included? When I have had the misfortune of having oil and water mixed in a failing engine, the end product looks like peanut butter. Is that what Saudi Arabia pumping? If it is, the volume may continue to go up while the EROEI continues to go down.

  13. peakyeast on Tue, 8th May 2018 8:50 am 

    Well they did open up the manifa heavy-oil field which can produce 900kbpd. And they are trying to diversify which is something IMO they would only do once its absolutely necessary.

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