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Saudi Aramco profit slumps after oil price drop

Aramco CEO Amin H Nasser at a press conference Reuters
Aramco CEO Amin H Nasser said the results reflect its "resilience and ability to adapt" and that investment is necessary for energy security
  • Net income fell from $88bn to $62bn in first half of year
  • Aramco promised shareholder dividends of $19.5bn for Q2
  • Investment plans include $11bn refinery expansion with TotalEnergies

Saudi Aramco on Monday reported income of $30 billion for the second quarter of 2023, down by more than a third from this time last year as oil prices fell.

The company said in a filing to the Saudi Stock Exchange that the decrease mainly reflected the impact of lower crude oil prices and weakening refining and chemicals margins. 

Net income for the first half of the year fell nearly 30 percent from $88 billion last year to $62 billion.

In a statement, Aramco said it remains focused on generating shareholder returns and declared base dividend of SAR73.2 billion ($19.5 billion) for the second quarter. Its stock price was up nearly 2 percent at the time of writing.

Despite the drop in income, Aramco president and CEO Amin H Nasser hailed the company’s “resilience and ability to adapt through market cycles”.

“Our mid to long-term view remains unchanged,” Nasser said.

“With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security.” 

Nasser said Aramco is maintaining the largest capital spending programme in its history, with the aim of increasing its oil and gas production capacity and expanding its downstream business.

He said petrochemicals projects, such as an $11 billion expansion of the Satorp refinery with TotalEnergies, were “essential to meet future demand”.  

“At the same time, we remain optimistic about the potential for new technologies to reduce our operational emissions, and our recent blue ammonia shipments to Asia highlight the growing market interest in the potential of alternative, lower-carbon energy solutions,” he added.

Nasser also said the company intends to start distributing its first performance-linked dividend in the third quarter and the board has approved an amount of nearly $10 billion.

Aramco is one of the largest companies in the world and Saudi Arabia is using oil revenues to fund ambitious plans to overhaul its economy as part of Vision 2030.

Wider impact

Beyond Aramco’s results, the kingdom’s oil production cuts continue to weigh on its economic performance.

The IMF recently cut Saudi’s 2023 GDP forecast to 1.9 percent, down 1.2 percentage points on its April estimate. 

Saudi Arabia warned last week that it could deepen cuts to oil production as it extended its voluntary supply curbs with Russia for another month.

According to data published by the General Authority for Statistics last month, overall merchandise exports from Saudi Arabia amounted to SAR97.1 billion in May, down 32 percent year on year.

The majority of this was a result of oil exports amounting to SAR72.0 billion, down SAR43.5 billion, or 37.7 percent, compared with May last year.