Saudi Aramco net profit down 23% after output cuts

Reuters/Ahmed Yosri

• Drop in volumes reflects Opec policy
• Revenue down 22% to $113bn
• Stake taken in South American firm

Saudi Aramco’s third quarter profit dropped by 23 percent year-on-year, after falls in both prices and volumes sold, the company said in a results announcement on November 7.

The drop in volumes reflects Opec output cuts that the kingdom has championed. 

“The decrease principally reflects the impact of lower crude oil prices and volumes sold,” the energy company said.

“This was partially offset by a reduction in production royalties primarily driven by lower average effective royalty rate, lower crude oil prices, and lower volumes sold.”

• Aramco explores possible bid for Shell’s Pakistan assets
• Aramco invests $500m in LNG business MidOcean
• Saudi Arabia extends oil cuts to end of year

Saudi Arabia said earlier in the week that it would continue its additional voluntary oil output cuts to the end of the year, as part of a policy by Opec+ of acting to stabilise and balance the markets. 

The kingdom wants to keep prices high in order to fund its massive Vision 2030 development programme, and giga-projects that have been valued at $1.25 trillion. 

Revenue at Aramco fell 22 percent to $113 billion in the quarter, from $145 billion a year earlier. It paid out $14.7 billion in royalties and other taxes, down from $24.3 billion a year earlier. 

The company declared a base dividend of $19.5 billion for the quarter. It approved a second distribution of performance-linked dividends, with a $9.87 billion payout to come in the fourth quarter. 

Net profit fell to $32.6 billion in the third quarter, from $42.4 billion a year earlier. 

Aramco’s president and CEO, Amin Nasser, said that during the third quarter the company made its first international investment in liquefied natural gas (LNG) “to capitalise on rising LNG demand”, entering the South American market by acquiring a minority stake in MidOcean Energy. 

The statement said there was “ongoing economic uncertainty” but added that that Aramco believes “energy demand is likely to increase over the mid to long term.”