Oil giant Saudi Aramco sees 2020 profits drop to USD 49 billion

Dubai, Mar 21 (AP) Saudi Arabia’s state-backed oil giant Aramco announced Sunday that its profits nearly halved in 2020 to USD 49 billion, a big drop that came as the coronavirus pandemic roiled global energy markets.
Saudi Arabian Oil Co. released its financial results a year after the pandemic sent the price of oil crashing to all-time lows as people stopped moving around the world to stem the spread of the virus. In recent weeks, however, the price has edged up as movement restrictions ease, commerce increases and more people get vaccinated against COVID-19. Still, analysts caution that a peak in demand may still be far off.
Despite the sharp drop in oil revenue, Aramco said it would stick to its promise of paying quarterly dividends of USD 18.75 billion USD 75 billion a year due to commitments the company made to shareholders in the run-up to its initial public offering. Nearly all of the dividend money goes to the Saudi government, which owns more than 98 per cent of the company.
The public figures, obligatory ever since the mostly state-owned company listed a sliver of its worth on Riyadh’s Tadawul stock exchange in 2019, offers valuable insight into the health of the region’s largest economy. Despite Saudi Crown Prince Mohammed bin Salman’s efforts to diversify the economy away from oil, the kingdom remains heavily dependent on oil exports to fuel government spending.
Saudi Aramco profit of USD 49 billion in 2020 is down from USD 88.2 in 2019 and USD 111.1 billion in 2018. Still, Aramco remains one of the world’s most valuable companies.
The company produced the equivalent of 9.2 million barrels per day of crude oil over the course of the year, its annual results said. Capital expenditure was down in 2020 to 27 billion compared to 32.8 billion the year before. Aramco expects to spend 35 billion this year, significantly lower than the previous estimates of 40- 45 billion.
In recent months, oil prices have made a major comeback from April 2020, when the price of international benchmark Brent crude dipped below 20 a barrel. For the first time in a year, the price of Brent surpassed 60 a barrel last month and traded over 64 a barrel Sunday.
The price increase has come as Saudi Arabia seems determined to curb output and support crude markets even as demand rises, with nations lifting lockdowns and accelerating vaccination campaigns.
Earlier this month, the kingdom said it would extend its voluntary production cut of 1 million barrels a day at least through April. Most OPEC oil cartel and allied countries likewise left their production cuts in place in stark contrast to March of last year when a price war between Saudi Arabia and Russia prompted the two oil giants to unleash an onslaught of crude on the market as demand dipped. Saudi officials have urged caution, arguing that global economic recovery may still be undermined by new coronavirus restrictions and fast-spreading virus variants.
Before December of 2019, when Aramco floated 1.5 pe cent of its shares on the stock exchange, the firm was owned directly by the Al Saud ruling family and didn’t need to announce results. Initially, Aramco listed at 32 riyals (USD 8.53) a share, becoming the world’s most valuable listed company, with a market valuation of USD 1.7 trillion. Since then, however, Aramco lost its stock exchange crown to Apple as its value declined. On Sunday it traded around 35 riyals (USD 9.30) a share. (AP)