Saudi Arabia has regained its top position ahead of the U.S. and Russia as the holder of the world's biggest recoverable oil resources, as reduced tax rates for state giant Saudi Aramco have added 73 billion barrels of recoverable oil, Norway-based consultancy Rystad Energy said on Tuesday in its annual review of global recoverable oil resources.
Saudi Arabia's recoverable oil resources are now estimated at 276 billion barrels, Rystad said, adding that the Kingdom's "revised fiscal regime should incentivize more aggressive exploration and development drilling in the country."
In March this year, Saudi Arabia cut the tax rate on Aramco to 50 percent from 85 percent. The high tax rate was one of the main reasons why international industry experts had not been valuing Aramco nearly as high as the US$2 trillion that Saudi officials have been claiming. Back then, Rystad Energy said that the tax rate cut was making Aramco more attractive to investors, and raises the valuation of its upstream portfolio by around US$1 trillion.
Rystad Energy's annual review from last year showed that the U.S. had the world's largest resources.
In this year's review, Rystad estimates U.S. recoverable oil resources at 263 billion barrels, more than 50 percent of which comes from shale oil.
"Texas alone accounts for more than 80 billion barrels of recoverable oil. Of these volumes, 90% is located in shale formations, with the revitalized Permian basin laying claim to more than 50 billion barrels," Rystad said on Tuesday.
But if natural gas liquids (NGLs) were included in the resource review, the U.S. would overtake Saudi Arabia by more than 50 billion of recoverable oil and petroleum liquids, the consultancy said. Related: Switching From Coal To Solar Could Save 50,000 Lives
Rystad Energy-which uses Society of Petroleum Engineers (SPE) standards in assessing reserves and resources-has estimated that total global recoverable oil resources are 2.2 trillion barrels, or 73 times the current annual production rate. Unconventional oil recovery accounts for 30 percent of global recoverable oil resources, while offshore represents 33 percent of the total.
According to Rystad Energy, as much as 40 percent of recoverable oil resources need the price of oil to be above US$80 per barrel in order to be profitable for oil companies.
"We are halfway in the buildup phase for US shale. We will see a new upcycle in the E&P business once US shale reaches this potential. Oil demand will also remain surprisingly robust over the next decade, despite new innovations to meet growing demand for individual transport in the Western Hemisphere," Per Magnus Nysveen, Head of Analysis at Rystad Energy, said while commenting on the resources review.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments