Aramco Oil Reserves Audit Unlikely To Be Completed In 2017

The independent audit of how much oil reserves Saudi Aramco really has is taking longer than initially planned—not because of surprises, but because the Saudis want to make sure that auditors have all the data to avoid skeptical comments at a later stage, sources close to the audit tell Reuters.

Aramco is opening the books for an audit ahead of the planned IPO—currently slated for the second half of 2018—expected to fetch billions of dollars to fund Saudi Arabia’s Vision 2030 to overhaul its economy and diversify sources of revenues away from oil.

According to Aramco’s own estimates, unconfirmed by the independent auditors, in 2016 the Saudi oil giant has 260.8 billion barrels of crude oil and condensate reserves.

According to BP Statistical Review of World Energy 2017, Saudi Arabia had 266.5 billion barrels of total proved oil reserves at the end of 2016.

A significantly higher or lower valuation of the reserves would greatly tip the scales of how much Aramco should be valued ahead of the IPO. Saudi officials have claimed that the company is worth $2 trillion, and taking 5 percent public would mean the Saudis getting $100 billion. Analysts, however, think that Aramco’s valuation could come in significantly lower than $2 trillion.

At the beginning of this year, Aramco was said to have hired Baker Hughes’ energy consulting services unit Gaffney, Cline & Associates, as well as Dallas-based DeGolyer and MacNaughton, to perform the reserves auditing.

In March, an industry source told Reuters that Saudi Aramco was hoping to have one of its two auditors complete its reserves review before the end of 2017.

“It’s a huge task,” a source familiar with the progress of the audits told Reuters today. “They are about two-thirds of the way through. It’s all going well and smoothly - no surprises,” the source added.

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“Aramco wants to make sure the companies are shown full data to avoid skeptical remarks on its reserves later on,” another source told Reuters. “It’s unlikely the audit will be finished this year,” they added.

Aramco must also unveil financials for the first time, and this is not expected to take place this year either. Over the past few months, speculation has been high on whether Saudi Arabia would delay Aramco’s IPO, which venue it would choose for an international listing, if it would list at all on an international market, or if it would opt for a private placement, probably with Chinese investors. The top Saudi officials, including Crown Prince Mohammed bin Salman and Energy Minister Khalid al-Falih, continue to insist that the IPO is on track for the second half of 2018.   

By Tsvetana Paraskova for Oilprice.com

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