Published: Sat, January 12, 2019
Finance | By Loren Pratt

Aramco to issue 1st ever global bond this year

Aramco to issue 1st ever global bond this year

OPEC kingpin Saudi Arabia said Wednesday that its huge oil reserves, already the second largest in the world behind only Venezuela, are even bigger than previously thought.

Saudi Arabian Minister of Energy Khalid al-Falih revealed the plan on Wednesday in Riyadh, saying that the company wanted flexibility in funding the Sabic deal, which could cost about US$70 billion.

He also said Saudi Arabia was producing 10.20 million bpd, delivering on an earlier pledge to cut output further than required by a supply-limiting deal between the Organization of the Petroleum Exporting Countries and allies such as Russian Federation.

But prices have partially rebounded in the past few days after a new deal, in which OPEC and non-OPEC oil producers agreed to trim output by 1.2 million bpd, came into effect in January.

"We will work with our advisers and find the right time to go to market, and part of that would be a prospectus that would have appropriate financial statements and disclosures", al-Falih said.

Entering the debt market is a move aimed at helping the company to finance its planned acquisition of a 70% stake in petrochemical firm SABIC from the kingdom's Public Investment Fund (PIF).


That figure is "more than sufficient to bring balance to the market", said Falih, adding that the production cut would trim excess supply. The global benchmark crude traded at a premium of $8.74 a barrel to West Texas Intermediate for the same month.

Leading consultants DeGolyer and MacNaughton (D&M) conducted the independent certification.

Oil rose for a 10th consecutive day in London, heading for its longest run of gains on record, as OPEC cutbacks reined in supply while reassurance from the Federal Reserve buoyed the outlook for demand.

The Kingdom previously announced that oil and gas reserves were 264 billion barrels of oil and 307.2 trillion standard cubic feet of gas respectively as of December 31, 2017. Its crude reserves totaled 268.5 billion barrels (Bbbls) at year-end 2017, up from the previous estimat of 266.3 Bbbls.

The operation was not fully concluded, so the interest rates have not yet been calculated.

A trade agreement could mitigate the global economic slowdown and keep global oil demand high; however, failure to reach a deal would worsen economic growth prospects and keep a downward pressure on oil demand and prices, according to experts.

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