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| Tue, 9th May 2023 11:56:00 |
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Saudi oil group Aramco to pay more to state despite profits drop |
World’s largest energy company’s first-quarter profits fall by 19% to $32bn after dip in oil prices
The Saudi government looks likely to reap greater revenues from the state-backed oil group Saudi Aramco despite the company posting a near-20% fall in quarterly profits.
The world’s largest oil and gas company said on Tuesday its profits had fallen by 19% in its first quarter compared with a year earlier, to nearly $32bn (£25bn), caused by a drop in oil prices.
The fall in profits provides a further sign that the worst of the energy crisis, which has squeezed household budgets, may have passed.
The profits still outstrip thenear $22bn recorded in the first quarter of 2021, before the energy crisis began later that year, and was later escalated by Russia’s invasion of Ukraine.
Oil prices have subsided from levels seen in 2022, but Aramco’s rivals, including BP and Shell, have posted strong first-quarter performances, helped by their trading divisions which bet that gas prices would fall sharply in early 2023. Oil and gas companies have been repeatedly accused of profiteering at the expense of consumers during the energy crisis.
Despite the fall in profits, Aramco’s shares rose 4% after the company said it would introduce performance-linked dividends.
The move means Aramco will distribute two forms of payout to shareholders, with a performance-linked dividend on top of a base payout. The company set a target of paying out 50% to 70% of its cashflow each year.
Increasing payouts to shareholders would increase revenues for the Saudi government, which holds more than 90% of the stock and draws on the country’s vast desert oil resources as huge source of wealth.
Aramco said: “Global crude oil prices declined in the first quarter of 2023 mainly driven by macroeconomic events contributing to market volatility. Aramco believes it is well positioned to withstand fluctuating commodity prices through its low-cost upstream production and strategically integrated downstream operations.”
The quarterly profits, marginally bigger than the $31bn made in the final quarter of last year, beat analysts’ expectation and the Aramco chief executive, Amin H Nasser, said the results demonstrated its “continued high reliability”.
In March, Aramco reported annual profits of $161bn, claiming it was the highest ever reported by a publicly listed company. Campaigners, concerned over the impact of its operations on the environment and the impact of the cost of living crisis, labelled the profits “shocking”.
Nasser said the company was working to reduce its carbon footprint. But he added: “We are also moving forward with our capacity expansion, and our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future.”
Saudi Aramco was floated on the domestic Tadawul market in 2019 after a fierce tussle between stock exchanges around the world to host one of the world’s biggest listings.
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