Saudi Aramco’s net revenue doubles to $110 billion on rising oil demand

Saudi Aramco reported its highest annual profits since its IPO in 2019, as the world’s biggest oil exporter benefited from the upsurge in energy demand.

Net income more than doubled in 2021 to $110 billion, the company said on Sunday, and it maintained its full-year cash dividend – one of the largest in the world – at $75 billion. . Analysts had forecast net profit of $109.7 billion, according to an average compiled by the company.

The state-backed group, which reported a profit of $49 billion a year earlier, said the 124% increase was due to “higher crude oil prices, refining margins and stronger chemicals and the consolidation of SABIC’s annual results”. The company acquired a 70% stake in Sabic, the Saudi petrochemical company, in 2020.

The dividend included $18.8 billion for the fourth quarter to be paid before the end of March. The payment is a vital source of revenue for the Saudi government, which owns 98% of Saudi Aramco shares after a small portion of the company’s shares went public in December 2019.

The company also said it would distribute $4 billion in bonus shares to existing shareholders.

The gearing, which the company defines as a measure of the degree of debt financing of operations, fell from 23% in December 2020 to 14.2%, as the company deployed part of its free cash flow of 107.5 billions of dollars. That compared to minus 4.9% in the first quarter of 2020 before falling prices due to the coronavirus pandemic forced the company to borrow heavily to maintain its dividend last year.

Saudi Aramco and its international rivals, including Chevron, ExxonMobil and BP, took advantage of the global economic recovery and supply constraints, which pushed oil prices above $100 a barrel for the first time in more than seven years.

Prices were pushed even higher by fears that a boycott of Russian oil following its invasion of Ukraine could remove up to 2.5 million barrels per day of crude oil and petroleum products from the market and the reluctance of Saudi Arabia and its OPEC+ allies to increase production to compensate.

The cartel has stuck to an agreement reached last year to increase production by no more than 400,000 barrels a day each month, even though some members have missed their quotas. The United States and other big consumers have repeatedly called on countries with significant spare capacity, such as Saudi Arabia and the United Arab Emirates, to pump more.

Saudi Aramco said average crude oil production in 2021 was 9.2 million bpd as it gradually replaced the production cut at the start of the pandemic. It is in the process of increasing its maximum production capacity from 12mn to 13mn b/d.

The company added that it was investing in carbon capture and storage, renewable energy and low-carbon hydrogen production after pledging in October to achieve industry-known net zero operational emissions. as Scope 1 and Scope 2, from its wholly owned assets by 2050.

The decision was announced following a decision by the Saudi government to reduce carbon emissions by 2060.

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Felix J. Dixon