Saudi Aramco boosts dividends despite profit fall
Saudi Aramco experienced a significant decline in profits following reductions in production and a sharp drop in oil prices throughout 2023. Profits plummeted by 25% to $121 billion (£91 billion) from the record-breaking levels achieved in 2022.
Despite this decline, the company still recorded its second-highest profit to date.
In response to the challenging market conditions, Saudi Aramco announced plans to increase dividends to $98 billion, marking a nearly one-third rise compared to 2022.
This decision reflects the company’s commitment to shareholders amidst the evolving landscape. Additionally, Saudi Aramco is exploring investment opportunities in China as part of its strategic initiatives.
The surge in profits during 2022, driven by soaring oil prices amid geopolitical tensions notably benefited the Saudi state, which owns nearly 95% of the company. However, in 2023, oil prices retreated to $85 a barrel, prompting Saudi Aramco to scale back production to stabilize prices, presenting further hurdles to 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,” Aramco’s chief executive Amin Nasser said in a statement.
Saudi Arabia is aiming to diversify the country’s economy, using income from its energy sector to fund the transition.
Mr Nasser said the firm would make some announcements this year on renewables investments in Saudi Arabia.
But he also said the oil giant was looking for opportunities to invest in China, where oil demand was growing.
“So far we are in the early part of 2024, demand is healthy and growing in China,” Mr Nasser told journalists.
Saudi Aramco already has investments in Chinese refineries.
He said he expects the oil market to be “fairly robust” in 2024 with demand just marginally higher than last year.
He also said discussions were taking place over a stake in the tie-up with French carmaker Renault and China’s Geely which make hybrid car engines.