Saudi Aramco profits peak after listing as global oil demand rebounds

Saudi Aramco reported its highest quarterly profits since its shares were listed in 2019, as the world’s largest oil exporter benefited from recovering global demand.

The state-backed group’s net profit reached $ 30.4 billion in the third quarter, from $ 11.8 billion a year earlier, due to higher prices, higher sold volumes and margins. refining and more solid chemicals, the company said in a statement Sunday. Analysts were forecasting net income of around $ 29.1 billion, according to an average established by the company.

Despite expectations exceeding expectations, generating free cash flow of $ 28.7 billion and calls from some analysts to increase shareholder returns, Saudi Aramco kept its dividend for the quarter at $ 18.8 billion. , in accordance with its forecasts.

Amin Nasser, Managing Director of Saudi Aramco, attributed the group’s strong performance to “increased economic activity in key markets and a rebound in energy demand, as well as our unique low-price position.”

“Some headwinds still exist for the global economy, in part due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future,” he said. he declares.

The company’s annual dividend, currently set at $ 75 billion, is a vital revenue stream for the Saudi government, which still owns 98% of Saudi Aramco’s shares after listing a slice of the company’s stock in December 2019.

Saudi Aramco has borrowed heavily to maintain its dividend during the fall in prices caused by the coronavirus pandemic last year. As a result, leverage, which the company defines as a measure of how well debt-financed operations are, fell from minus 4.9% in the first quarter of 2020 to 23% in December. It remained at that level in the first quarter of this year.

The group reduced its debt ratio to 19.4% in the second quarter and reduced it again in the past three months to 17.2%, a move it attributes mostly to higher cash flow . Capital spending this year was still forecast at around $ 35 billion, he said.

Saudi Aramco, like its international rivals including Chevron, ExxonMobil and BP, have all benefited from the global economic recovery this year, which has pushed oil prices above $ 80 a barrel for the first time in more than three years.

The prices were further supported by Saudi Arabia and its allies in the Opec + group carefully monitoring the return of production which they cut at the start of the pandemic. The cartel agreed to increase production to a level of 400,000 barrels per day each month, but resisted pressure from the United States, Japan and India to move faster.

Saudi Aramco said it produced around 9.5 mb / d of crude in the past three months, up from around 8.5 mb / d in the second quarter.

Unlike its international peers, many of whom have pledged to gradually cut oil production to reduce emissions, Saudi Aramco is increasing its maximum production capacity from 12 million barrels per day to 13 million barrels per day. .

Last week, it followed up on Saudi Arabia’s pledge to reduce carbon emissions by 2060 with its own pledge to achieve zero net operational emissions, known in the industry as scope 1. and scope 2, of its wholly-owned assets by 2050, but this is still the case. to provide further details.

“Going forward, we maintain our long-term investment strategy, and we will build on our low-cost, low-carbon track record to drive our business forward. [net zero] ambition, ”Nasser said on Sunday.


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Felix J. Dixon

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