DUBAI – In a recent financial disclosure, Saudi Arabia’s oil colossus Aramco has declared a profit of $121 billion for the past year. Although this figure represents a decrease from the previous year’s record-breaking profit due to diminished energy prices, it still stands as the second-highest earning in the company’s history.
This downturn in earnings occurs as the OPEC+ group, which includes Saudi Arabia, persists with production cuts aimed at propping up global energy prices. The decrease in profits also places pressure on Saudi Arabia as it embarks on ambitious development initiatives led by its dynamic Crown Prince, aimed at reducing the nation’s dependency on oil income.
Aramco’s unprecedented profit in 2022 reached $161 billion, potentially the highest ever for a publicly traded company. The recent decline has been attributed to a combination of lower crude oil prices, reduced sales volumes, and slimmer refining and chemical margins, as stated in the company’s Tadawul stock market filing.
Despite the dip in annual profit, Aramco has increased its dividend payout to shareholders, exceeding $31 billion in the last quarter of the year. The corporation has scheduled a conference call to further discuss the financial outcomes.
Last year’s total revenue for Aramco was recorded at $440 billion, which is a decrease from the $535 billion reported in 2022. Aramco CEO Amin H. Nasser highlighted the company’s resilience and agility which have allowed it to maintain strong cash flows and profitability amidst challenging economic conditions.
Aramco, officially known as the Saudi Arabian Oil Co., reported an average daily production of 12.8 million barrels of oil. Despite initial plans to raise production, the Saudi government has directed the company to maintain this output level.
As part of an alliance with Russia and other non-OPEC countries, Saudi Arabia has been instrumental in limiting oil production to support higher global oil prices. On the day of the report, benchmark Brent crude was trading below $82 per barrel.
With a market valuation of $2 trillion, Aramco is ranked as the world’s fourth most valuable company, trailing Apple, Microsoft, and NVIDIA. Shares of Aramco saw a slight increase on the Tadawul, priced at $8.64 per share.
The nation’s abundant oil reserves, which are relatively inexpensive to extract, position Saudi Arabia as a leading player in the global oil market. The Crown Prince’s vision is to leverage the kingdom’s petroleum wealth to diversify the economy, with grand projects like the $500 billion futuristic city, Neom.
The announcement of the profits has not gone without criticism from environmental activists concerned about the impact of fossil fuels on climate change.
In a recent strategic move, Prince Mohammed transferred an additional 8% of Aramco shares to Saudi Arabia’s sovereign wealth fund, a transaction valued at over $160 billion. The royal Al Saud family maintains the majority stake in the company, with only a small fraction of shares available on the Tadawul stock market.