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Saudi Arabia's vast oil reserves even bigger than thought

Saudi Arabia, January 10, 2019

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.

The energy ministry said proven oil reserves stood at 263.2 billion barrels at the end of last year, up from the figure of 261 billion barrels that has been used for almost three decades.

The kingdom has another 2.9 billion barrels of crude in a border zone shared with neighbouring Kuwait, bringing total oil reserves to 266.1 billion barrels, the ministry said.

Natural gas reserves also grew from 302.3 trillion cubic feet (8.56 trillion cubic metres) to 324.4 trillion cubic feet (9.2 trillion cubic metres), the ministry said.

It said the new figures have been backed by an independent third-party certification by leading consultants DeGolyer and MacNaughton (D&M).

Saudi Arabia is the world's top oil exporter. It is the third biggest producer after the United States and Russia with around 10.6 million barrels per day.

Energy Minister Khalid al-Falih said Saudi oil remains among the cheapest in the world to extract, at only $4 a barrel.

He said Saudi Arabia will slash its oil exports in January by 10 percent compared to November as producers move to shore up tumbling prices.

He said the kingdom, the world's top crude supplier, would cut its exports to 7.2 million barrels per day in January, down from 8.0 million bpd in November.

He also announced a further 100,000 bpd cut in February.

OPEC and its allies decided last month to cut their overall output by 1.2 million bpd starting in January, to boost prices hit by a supply glut and fears demand could plummet.

'We are serious about restoring balance to the market,' Falih told a press conference in Riyadh.

'We are concerned about volatility in the oil market,' he said. 'We have seen peaks and drops in prices (that are) completely unjustified by the fundamentals.'

After Brent crude hit $85 a barrel in early October, prices dived more than 40 percent over the following two months due to oversupply and fears of a trade war between the United States and China that could slash energy demand.

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.

That figure is 'more than sufficient to bring balance to the market,' said Falih, adding that the production cut would trim excess supply from the market.