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Published photo, Reuters
Oil revenues are a major source of funding for diversification projects
Saudi Aramco Oil Company announced that its profits for 2020 were down 44.4% from 2019.
Officials attributed the drop in profits to lower oil prices in international markets, due to the coronavirus pandemic.
But the company, in which the state owns most of the stakes, nonetheless made $ 49 billion in profits last year and remains one of the world’s largest companies in terms of financial value.
Aramco’s profit decline for the second time in a row increases pressure on the Saudi government, which has launched giant projects worth billions of dollars, to diversify the country’s economy, which depends mainly on oil revenues .
“Aramco made $ 49 billion in profits in 2020, up from $ 88.2 billion in 2019,” the company statement said.
Saudi Arabia is the world’s largest exporter of oil, but its exports suffered a double setback last year due to falling prices in international markets and a significant reduction in production.
The statement defended the performance of the company, saying: “Aramco has shown great financial flexibility in one of the most difficult times in the oil industry”, adding that “revenues have been affected by the lower oil prices and quantities sold, as well as low profit margins from refining and petrochemicals activities. ”
Oil prices have risen in recent weeks to over $ 60 a barrel.
But analysts expect Saudi society to face more financial difficulties hampering the economy’s recovery due to the coronavirus pandemic.
Despite the decline in the company’s net profits, the company’s board of directors decided to distribute cash benefits to shareholders totaling $ 75 billion, a figure that exceeds the reported net profits of the company. society.
The distribution of cash benefits helps the government, the company’s main shareholder, to manage its growing budget deficit.
Company President Amin Al-Nasser said: “Given the impact of the Covid-19 pandemic on global markets, we have focused on improving the efficiency of spending by capital and operating expenses, which has helped maintain our strong financial position. , and announced dividends of 281 billion riyals (US $ 75 billion).) for the year 2020. “
The release expects the company’s spending in 2021 to be in the order of $ 35 billion, much lower than previous forecasts, which hovered between $ 40 billion and $ 45 billion.
Bloomberg reported in June that Aramco had cut hundreds of jobs to cut costs.
Falling oil revenues are expected to hamper Crown Prince Mohammed bin Salman’s ambitious plan, known as “Vision 2030,” which aims to fundamentally reform the oil-dependent economy.
Aramco was listed on the Saudi Stock Exchange in December 2019 in a share offering that brought in $ 29.4 billion in exchange for 1.7 of the company’s shares.
Mohammed bin Salman said in January that Saudi Arabia wanted to sell more Aramco shares in the coming years.
He added that selling stocks is an important way to boost the Public Investment Fund, which is the main source of funding for diversification efforts.
However, analysts believe the supply of equities may struggle to attract investment, given that the energy sector has weakened due to the Corona pandemic, which has led to lower global demand. 9.
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