Logo of Aramco, officially the Saudi Arabian Oil Group, Saudi oil and natural gas company, seen on the second day of the 24th World Petroleum Congress at the Big 4 Building in Stampede Park, on September 18, 2023, in Calgary, Canada.
Arthur Widak | Photo only | Getty Images
Saudi Arabia’s state-owned oil giant Aramco reported a 25% drop in profits to $121.3 billion in 2023, compared to $161.1 billion in 2022.
“The year-on-year decline was due to lower crude oil prices and volumes sold, as well as lower refining and chemical margins, partially offset by a decline in production royalties during the year and lower income taxes and zakat,” Aramco said in a statement.
Aramco said total revenue also fell 17% to $440.88 billion, compared with $535.19 billion last year.
The result still represents the second-highest net profit ever for Aramco. Free cash flow also fell to $101.2 billion in 2023, compared to $148.5 billion in 2022.
“Our resilience and agility have contributed to healthy cash flows and high profitability despite economic headwinds,” said Amin Nasser, CEO of Aramco.
Change hands
The proceeds come after the Saudi government transferred an additional 8% of Aramco shares worth $164 billion to Saudi Arabia’s Public Investment Fund (PIF). Yasir Al-Rumayyan is both chairman of Aramco and governor of the PIF.
The share transfer to PIF is one of the largest transactions Aramco has undertaken since listing and will allow PIF to benefit from Aramco’s mega dividend distribution policy. PIF already owned 4% of Aramco and controls Sanabil, a financial investment firm that also owns 4% of Aramco.
According to Aramco, dividends totaling $97.8 billion were paid out in 2023, up 30% from 2022. A base dividend of $20.3 billion was declared for the fourth quarter, to be paid out in the first quarter of 2024. Aramco is also paying performance-based dividends of $10.8 billion this year. The full-year performance dividend, paid in 2024, is expected to be $43.1 billion.
The PIF’s 16 percent stake in Aramco, valued at an estimated $328 billion, is intended to strengthen its financial position and increase its ability to deploy capital to invest on behalf of the Saudi state. The new investment also brings PIF closer to its goal of reaching $1 trillion in assets under management by the end of 2025.
More investments
Aramco confirmed it would halt plans to increase its oil production capacity from 12 million barrels per day to 13 million barrels per day – a move that is expected to reduce capital investment by about $40 billion between 2024 and 2028.
“The government’s recent direction to maintain our maximum sustainable capacity at 12 million barrels per day provides greater flexibility and the opportunity to focus on increasing gas production and expanding our business from liquids to chemicals,” Nasser said.
Aramco’s average hydrocarbon production was 12.8 million barrels of oil equivalent per day in 2023, including 10.7 million barrels per day of total liquids.
Aramco wants to increase its investment in gas and has set a goal of increasing gas production by more than 60% by 2030 compared to 2021 levels. Its main investment is the Jaffoura project – the largest gas project in the Middle East – with an estimated 200 trillion standard cubic feet of natural gas.
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2024-03-10 07:46:06
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