The logo of Aramco, officially Saudi Arabian Oil Group, Saudi Petroleum and Natural Gas Company, is seen on day two of the 24th World Petroleum Congress at the Big 4 Building in Stampede Park, on September 18, 2023, in Calgary, Canada.
Artur Vidak | norphoto | Getty Images
National oil giant Saudi Aramco announced a 25% drop in profits to $121.3 billion in 2023, down from $161.1 billion in 2022.
“The year-on-year decline can be attributed to lower crude oil prices and volumes sold, as well as lower refining and chemicals margins, which is partially offset by a decrease in production duties during the year and lower income taxes and zakat,” Aramco said. In a statement
Total revenue also fell by 17% to $440.88 billion, down from $535.19 billion last year, Aramco said.
The result still represents Aramco's second-highest net income ever. Free cash flow also decreased to $101.2 billion in 2023, compared to $148.5 billion in 2022.
“Our agility and agility have contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds,” Aramco CEO Amin Nasser said.
Change hands
These profits come after the Saudi government transferred an additional 8% of Aramco shares, worth $164 billion, to the Saudi Public Investment Fund. Yasser Al-Rumayyan is Chairman of Aramco and Governor of the Public Investment Fund.
The transfer of shares to the PIF is one of the largest transactions Aramco has undertaken since its listing, and will allow the PIF to benefit from Aramco's huge dividend policy. The Public Investment Fund already owns 4% of Aramco, and controls Sanabel, a financial investment firm that also owns 4% of Aramco.
Aramco said a total dividend of $97.8 billion was paid in 2023, up 30% from 2022. It announced a basic dividend of $20.3 billion for the fourth quarter, to be paid in the first quarter of 2024. Aramco also pays performance-linked dividends, Worth $10.8 billion this year. The full-year performance-related dividend to be paid in 2024 is expected to reach $43.1 billion.
The Public Investment Fund’s 16% stake in Aramco, valued at approximately $328 billion, is expected to strengthen its financial position and enhance its ability to deploy capital to invest on behalf of the Saudi state. The new share also pushes the Public Investment Fund closer to achieving its goal at the end of 2025 of $1 trillion in assets under management.
More investment
Aramco confirmed that it will halt its plans to raise its oil production capacity from 12 million barrels per day to 13 million barrels per day – a move that is expected to reduce capital investment by about $40 billion between 2024 and 2028.
“The recent directive from the government to maintain our maximum sustainable capacity at 12 million barrels per day provides increased flexibility, as well as the opportunity to focus on increasing gas production and growing our liquids-to-chemicals business,” Nasser said.
Aramco's hydrocarbon production will average 12.8 million barrels of oil equivalent per day in 2023, including 10.7 million barrels per day of total liquids.
Aramco aims to increase its investments in gas, and aims to increase gas production by more than 60% by 2030, compared to 2021 levels. Its main investment is the Jafurah project – the largest gas project in the Middle East – with an estimated 200 trillion standard cubic feet of natural gas.