Saudi Aramco’s profits rose 30% in the first quarter of the year as COVID-ravaged economies come back to life and revive oil demand.
Saudi Aramco said on Tuesday that its profits increased 30% in the first quarter of the year, compared to last year, down from higher crude oil prices. The results come as some of the world’s largest economies are opening up to recession and easing restrictions amid the deployment of COVID-19 vaccines.
The company’s financial results show net income of $ 21.7 billion during the first three months of the year, compared to the same period in 2020, when Aramco’s profits fell to $ 16.7 billion, as the first effects of the coronavirus pandemic were beginning to drastically reduce global demand. for oil. Brent crude fell to about $ 20 a barrel at its lowest point last year.
Saudi Arabian Oil Co. said the increase in profits mainly reflects the impact of higher crude oil prices, which in recent months have averaged about $ 60 a barrel. Prices have risen steadily amid rising demand for disciplined cuts in production by producers to balance the market.
Aramco produced about 9.2 million barrels a day in 2020, compared to a current average of 8.6 million barrels a day during the first quarter of 2021.
The company confirmed it would deliver a promised dividend of $ 18.75 billion to its shareholders this quarter, or what amounts to $ 75 billion a year. Almost all of this payment goes to the Saudi government, which owns more than 98 percent of the company, with the remaining 1.7 percent listed on the Saudi stock exchange.
The payment, however, exceeds Aramco’s current cash flow of $ 18.3 billion. Aramco saw its full-year profits nearly halve in 2020 to $ 49 billion, from $ 88 billion in 2019 and $ 111 billion in 2018.
Still, the Saudi company remains one of the most valuable companies in the world.
Aramco’s higher profits will come as a welcome relief for the Saudi government, which continues to rely heavily on the company’s oil barrels for revenue.
Aramco, which produces all of the kingdom’s oil and gas, is instrumental in the efforts of Crown Prince Mohammed bin Salman (MBS) to diversify the economy. The prince intends to transfer Aramco’s ownership to the country’s sovereign wealth fund and use the profits for investments abroad and locally with the aim of spurring new sectors and generating millions of new jobs for to Saudi youth.
Aramco CEO Amin Nasser said first-quarter earnings are a sign that “better days are coming.”
“While there are still some headwinds left, we are well positioned to meet the world’s growing energy needs as economies begin to recover,” he said.
The company noted in its benefit report that while worldwide vaccination programs to combat COVID-19 encourage development, the pandemic is far from over.
The company recently announced a $ 12.4 billion deal to sell leasehold rights on its pipelines to an investor consortium led by EIG Global Energy Partners. The sale aims to raise money to maintain Aramco’s dividend commitment with shareholders.
MBS revealed in an interview last week that there are talks to sell a 1% stake in Aramco to a world-leading energy company. Although he did not reveal further details, speculation has revolved around potential buyers from China, which is the world’s largest importer of oil.