RIYADH: The oil giant Saudi Aramco, on Tuesday reported the net fortunate of $ 29.07 billion in the second quarter, a slight drop from the same period last year as output stay firm.
The 3.4 percent decline “mainly reflects the impact of lower crude oil oil volume sold and reduced refining margins”, the company said in a statement sent to the Saudi stock exchange.
Saudi Arabia, the world’s biggest crude exporter, currently produces about nine million barrels per day (bpd), less than its 12 million bph capacity.
Production averaged 8.8 million bpd in June, Riyadh-based firm Jadwa Investment said last week.
The relatively low figures indicate cuts from October 2022, when the OPEC+ bloc of oil producers led by Riyadh with Moscow announced it would cut output by two million bpd to boost prices.
In April 2023, several OPEC+ members announced they would cut production by more than one million bpd, and in June 2023, Riyadh announced an additional voluntary cut of one million bpd.
“Output will remain at the same level until at least October”, where the OPEC+ agreement announced in June 2024 will allow “gradual monthly increases”, Jadwa said.
Aramco is the crown jewel of the Saudi economy and a key source of revenue for Crown Prince Mohammed bin Salman’s Vision 2030 reform agenda, which aims to set the Gulf kingdom up for a prosperous post-oil future.
The firm’s profits have helped allow Saudi Arabia to finance flagship projects including NEOM, a futuristic mega city built in the desert, a giant airport in Riyadh and tourism and leisure development.
The IMF said in April that, at current production levels, Saudi Arabia’s fiscal oil price will be $96.2 per barrel in 2024.
Brent, the international benchmark, traded at $76.43 a barrel on Tuesday after global stock markets on Monday were driven by US recession fears.
But Aramco chief executive Amin Nasser told reporters that Aramco was still “positive about the outlook for global oil demand”, pointing to “strong” demand from China.
“The market in my view is overreacting and fundamentally does not support the drop in prices that we are witnessing today,” said Nasser.
“I think the market is reading too much into the short-term response to the news coming out of the US on jobs numbers.”
Fixed dividend
The government’s stake in Aramco, one of the world’s largest companies by market capitalization, is 81.5 percent.
Aramco’s initial public offering in 2019, the largest flotation in history, raised $29.4 billion, and this year’s secondary offering of nearly 1.7 billion shares raised $12.35 billion.
Aramco announced last year that it would start paying a performance-based dividend in addition to the basic dividend.
In May, the company announced a basic dividend payment for the first quarter totaling $20.3 billion and a performance-related dividend distribution of $10.8 billion to be paid in the second quarter.
The payment will be extended for another quarter and Aramco “expects to declare an industry-leading dividend of $124.2 billion in 2024”, it said on Tuesday.
“We have once again delivered a market-leading performance, with strong earnings and cash flow in the first half of the year,” Nasser said.
“Using our strong earnings, we continue to deliver a sustainable and progressive fundamental dividend.”
Cash cow
Aramco reported record profits in 2022 after Russia’s invasion of Ukraine sent oil prices soaring, allowing Saudi Arabia to record its first budget surplus in nearly a decade.
But the cash cow saw profits fall a quarter last year due to lower oil prices and production cuts, and profits in the first quarter of this year fell 14.5 percent.
In January, Aramco said it had been ordered to abandon plans to increase production capacity to 13 million barrels per day, from the current level of 12 million bpd.
Analysts said the surprise announcement could reflect a lack of confidence in demand, although the Minister of Energy Prince Abdulaziz bin Salman said it was motivated by the transition to clean fuel.
Saudi Arabia has pledged to achieve net zero carbon emissions by 2060, a claim that has drawn strong skepticism from environmental activists.
Aramco has pledged to achieve “net-zero operational” carbon emissions by 2050, which excludes emissions from customers burning their products.
Nasser told reporters on Tuesday that demand for oil and gas “will not rise in the long term because of the important role that hydrocarbons continue to play in the global economy”.
The 3.4 percent decline “mainly reflects the impact of lower crude oil oil volume sold and reduced refining margins”, the company said in a statement sent to the Saudi stock exchange.
Saudi Arabia, the world’s biggest crude exporter, currently produces about nine million barrels per day (bpd), less than its 12 million bph capacity.
Production averaged 8.8 million bpd in June, Riyadh-based firm Jadwa Investment said last week.
The relatively low figures indicate cuts from October 2022, when the OPEC+ bloc of oil producers led by Riyadh with Moscow announced it would cut output by two million bpd to boost prices.
In April 2023, several OPEC+ members announced they would cut production by more than one million bpd, and in June 2023, Riyadh announced an additional voluntary cut of one million bpd.
“Output will remain at the same level until at least October”, where the OPEC+ agreement announced in June 2024 will allow “gradual monthly increases”, Jadwa said.
Aramco is the crown jewel of the Saudi economy and a key source of revenue for Crown Prince Mohammed bin Salman’s Vision 2030 reform agenda, which aims to set the Gulf kingdom up for a prosperous post-oil future.
The firm’s profits have helped allow Saudi Arabia to finance flagship projects including NEOM, a futuristic mega city built in the desert, a giant airport in Riyadh and tourism and leisure development.
The IMF said in April that, at current production levels, Saudi Arabia’s fiscal oil price will be $96.2 per barrel in 2024.
Brent, the international benchmark, traded at $76.43 a barrel on Tuesday after global stock markets on Monday were driven by US recession fears.
But Aramco chief executive Amin Nasser told reporters that Aramco was still “positive about the outlook for global oil demand”, pointing to “strong” demand from China.
“The market in my view is overreacting and fundamentally does not support the drop in prices that we are witnessing today,” said Nasser.
“I think the market is reading too much into the short-term response to the news coming out of the US on jobs numbers.”
Fixed dividend
The government’s stake in Aramco, one of the world’s largest companies by market capitalization, is 81.5 percent.
Aramco’s initial public offering in 2019, the largest flotation in history, raised $29.4 billion, and this year’s secondary offering of nearly 1.7 billion shares raised $12.35 billion.
Aramco announced last year that it would start paying a performance-based dividend in addition to the basic dividend.
In May, the company announced a basic dividend payment for the first quarter totaling $20.3 billion and a performance-related dividend distribution of $10.8 billion to be paid in the second quarter.
The payment will be extended for another quarter and Aramco “expects to declare an industry-leading dividend of $124.2 billion in 2024”, it said on Tuesday.
“We have once again delivered a market-leading performance, with strong earnings and cash flow in the first half of the year,” Nasser said.
“Using our strong earnings, we continue to deliver a sustainable and progressive fundamental dividend.”
Cash cow
Aramco reported record profits in 2022 after Russia’s invasion of Ukraine sent oil prices soaring, allowing Saudi Arabia to record its first budget surplus in nearly a decade.
But the cash cow saw profits fall a quarter last year due to lower oil prices and production cuts, and profits in the first quarter of this year fell 14.5 percent.
In January, Aramco said it had been ordered to abandon plans to increase production capacity to 13 million barrels per day, from the current level of 12 million bpd.
Analysts said the surprise announcement could reflect a lack of confidence in demand, although the Minister of Energy Prince Abdulaziz bin Salman said it was motivated by the transition to clean fuel.
Saudi Arabia has pledged to achieve net zero carbon emissions by 2060, a claim that has drawn strong skepticism from environmental activists.
Aramco has pledged to achieve “net-zero operational” carbon emissions by 2050, which excludes emissions from customers burning their products.
Nasser told reporters on Tuesday that demand for oil and gas “will not rise in the long term because of the important role that hydrocarbons continue to play in the global economy”.
