The energy powerhouse Saudi Aramco has witnessed a substantial drop in earnings, following a period of reduced production and a downturn in oil prices during the year 2023.
The company’s profits took a 25% hit, falling to $121 billion, after experiencing a historically profitable year in 2022.
Despite the decline, these figures represent the second-largest profits in the company’s history.
With an eye toward rewarding its investors, Saudi Aramco announced plans to augment its dividend distributions to shareholders, aiming for a total of $98 billion, a notable increase from the prior year.
2022 saw the energy firm amassing a record profit of $161 billion, largely due to the surge in oil prices induced by the conflict in Ukraine, which saw oil reach a peak of $130 per barrel.
As the majority stakeholder in Aramco, the Saudi government reaped the benefits of these exceptional profits, leading to a budget surplus for the nation in the same year.
The oil market in 2023 showed a regression with prices settling at $85 per barrel, and Aramco’s strategic production cuts to buttress the market price further impacting profitability.
“In 2023 we achieved our second-highest ever net income. Our resilience and agility contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds,” stated Aramco’s chief executive Amin Nasser.
With the intent to diversify its economy, Saudi Arabia plans to use the wealth generated from its energy sector to finance its transition.
Investments in renewable energy in Saudi Arabia are on the horizon for Aramco, as announced by Nasser, alongside the company’s ambition to capitalize on burgeoning oil demand in China.
“So far we are in the early part of 2024, demand is healthy and growing in China,” Nasser informed the press, alluding to the company’s existing investments in Chinese refineries.
Expectations for the oil market in 2024 are optimistic, with projections of a robust market and a marginal increase in demand compared to the previous year. Additionally, Aramco is engaged in discussions concerning an investment in a joint venture between French automaker Renault and China’s Geely, which specializes in hybrid car engines.