Saudi Aramco’s Dividends Surge Amid Profit Decrease
Saudi Aramco, the energy giant, has announced a significant 25% decline in profits, reaching $121 billion in 2023, following a stellar performance in the previous year. Despite this decrease, the figure remains the second-highest profit ever recorded for the state-backed company. The profit dip is attributed to a reduction in production and a sharp decline in oil prices throughout 2023.
In response to these financial challenges, Saudi Aramco has decided to increase dividends to shareholders, marking a substantial 30% rise compared to 2022. The company achieved a record-breaking $161 billion in profit that year, primarily influenced by the impact of Russia’s war in Ukraine on energy prices, driving oil prices up to $130 a barrel.
The Saudi government owns nearly 95% of Saudi Aramco, and the company’s robust profits in 2022 contributed to a budget surplus for the kingdom. However, in 2023, oil prices retreated to $85 a barrel, prompting Saudi Aramco to curtail production to support costs, further impacting its profitability.
Aramco’s Chief Executive, Amin Nasser, emphasized the company’s resilience and agility in navigating economic headwinds, resulting in the second-highest net income in 2023. Despite the challenges, he highlighted healthy cash flows and sustained profitability.
Looking forward, Saudi Arabia aims to diversify its economy, utilizing income from the energy sector to facilitate the transition. Nasser revealed plans for announcements this year regarding renewable investments in Saudi Arabia, underscoring the nation’s commitment to sustainable practices.
Moreover, Saudi Aramco is exploring investment opportunities in China, where oil demand continues to grow. Nasser expressed optimism about the Chinese market, emphasizing healthy and expanding demand. The company already holds investments in Chinese refineries.
As discussions unfold in 2024, Nasser anticipates a robust oil market, with demand slightly surpassing the previous year. Notably, talks are underway regarding a potential stake in a collaboration between French carmaker Renault and China’s Geely, both prominent players in producing hybrid car engines. This strategic move aligns with Saudi Aramco’s commitment to exploring diverse opportunities in the ever-evolving global energy landscape.
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