Saudi Arabia has always claimed vast oil reserves. An audit just proved it's right

The government of Saudi Arabia said in a statement Wednesday that US energy consultancy DeGolyer & MacNaughton had concluded that its oil reserves total 268.5 billion barrels.

The estimate is slightly higher than the 266.3 billion barrel figure previously published by the Saudi government.

Allowing an independent company to assess its reserves represents a major shift for Saudi Arabia, which has for decades closely guarded data about its oil and gas industry.

Yet the country is now embarking on reforms in an attempt to diversify its economy away from oil. It had hoped to launch an initial public offering for state-owned oil company Aramco, but plans for the listing were put on hold.

A lack of transparency over the size of the country's energy reserves had caused skepticism about the potential sale and the value of Aramco.

Saudi officials had said that selling just 5% of Aramco could generate $100 billion that could be used to fund Vision 2030, a blueprint of what the country's economy should look like over the next decade.

The country on Wednesday highlighted the value and power of Aramco, the world's largest oil company.

"This certification underscores why ... we believe Saudi Aramco is the world's most valuable company and indeed the world's most important," Saudi energy minister Khalid Al Falih said in a statement.

What oil's plunge says about the global economy in 2019

Saudi Arabia pumped oil at record levels in 2018, including output of 11 million barrels a day in November.

That leaves "spare capacity very low, much lower than the 1.5 to 2 million barrels a day which they used to aim for," said Spencer Welch, oil markets executive director at IHS Markit.

"This [audit] announcement ... means that Saudi has been doing more drilling and so has discovered more oil. The extra drilling is likely in an effort to regain some of the lost spare production capacity," he said.

In December, Saudi Arabia agreed along with OPEC members and other major producers including Russia to cut production further in an effort to boost prices.

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