The logo of Aramco, officially Saudi Arabian Oil Group, Saudi Petroleum and Natural Gas Company, is seen on day two of the 24th World Petroleum Congress at the Big 4 Building in Stampede Park, on September 18, 2023, in Calgary, Canada.
Artur Vidak | norphoto | Getty Images
Oil giant Saudi Aramco reported a 25% drop in profits to $121.3 billion in 2023, down from $161.1 billion in 2022, and boosted its massive dividend despite “economic headwinds.”
Aramco raised its fourth-quarter core earnings by 4% to $20.3 billion, and raised its performance-related earnings by 9% to $10.8 billion, resulting in a dividend distribution of $31 billion to the Saudi government and Aramco stakeholders.
Despite the decline in profits, the result still represents Aramco's second-highest net income ever, far exceeding the profitability of its largest global peers.
“The year-on-year decline can be attributed to lower crude oil prices and volumes sold, as well as lower refining and chemicals margins, which is partially offset by a decrease in production duties during the year and lower income taxes and zakat,” Aramco said. In the current situation.
Total revenue also fell by 17% to $440.88 billion, down from $535.19 billion last year, Aramco said. Free cash flow also decreased to $101.2 billion in 2023, compared to $148.5 billion in 2022.
“It was a year that saw global oil demand reach record levels despite geopolitical volatility, economic headwinds and inflationary pressures,” Aramco CEO Amin Nasser said in an earnings press conference on Sunday.
Al-Nasser added: “We expect the global oil market to remain in good condition during the remainder of this year, and we expect it to be fairly strong with growth of about 1.5 million barrels.” Saudi Arabia led OPEC+ countries last week in a decision to extend voluntary oil production cuts until the end of June.
Change hands
These profits come after the Saudi government transferred an additional 8% of Aramco shares, worth $164 billion, to the Saudi Public Investment Fund. Yasser Al-Rumayyan is Chairman of Aramco and Governor of the Public Investment Fund.
The transfer of shares to the PIF is one of the largest transactions Aramco has undertaken since its listing, and will allow the PIF to benefit from Aramco's huge dividend policy.
Aramco paid a dividend of $97.8 billion in 2023, up 30% from 2022. Full-year performance-related earnings for 2024 are expected to be $43.1 billion alone.
Ziad Al-Murshed, Aramco's chief financial officer, said in a press conference to announce the results that transferring shares “does not change anything.” “We are in good health and we do not need to issue new shares,” he said in response to a question about speculation about a secondary or additional public offering of shares.
The Public Investment Fund already owns 4% of Aramco, and controls Sanabel, a financial investment firm that also owns 4% of Aramco. The Public Investment Fund’s 16% stake in Aramco, valued at approximately $328 billion, would strengthen the fund’s financial position and enhance its ability to deploy capital to invest on behalf of the Saudi state, which is working to gradually diversify its economy away from oil.
The new stake in Aramco also pushes the Public Investment Fund closer to achieving its goal at the end of 2025 of $1 trillion in assets under management.
More investment
Aramco confirmed that it will halt its plans to raise its oil production capacity from 12 million barrels per day to 13 million barrels per day, a step that is expected to reduce capital investment by about $40 billion between 2024 and 2028.
“The recent directive from the government to maintain our maximum sustainable capacity at 12 million barrels per day provides increased flexibility, as well as the opportunity to focus on increasing gas production and growing our liquids-to-chemicals business,” Nasser said.
Aramco's hydrocarbon production will average 12.8 million barrels of oil equivalent per day in 2023, including 10.7 million barrels per day of total liquids.
Aramco aims to increase its investments in other projects, including oil and gas infrastructure. It aims to increase gas production by more than 60% by 2030, compared to 2021 levels. Its main gas investment is the Jafurah project – the largest gas project in the Middle East – with an estimated 200 trillion standard cubic feet of natural gas.
