Aramco Increases Dividend by 30% to $98 Billion Despite Profit Decline
Saudi Arabia’s state-owned oil giant Aramco (2222.SE) has announced a significant increase in dividends, reaching $97.8 billion for the year, up 30% from the previous year, even as its net profit declined by 24.7% to $121.3 billion in 2023. The decrease in profit was attributed to lower oil prices and volumes, highlighting the continued importance of oil revenue to the Saudi economy amid diversification efforts.
Despite the profit dip from $161.1 billion in 2022, Aramco noted that 2023 still marked its second-highest profit on record. Oil revenues constituted 62% of total state revenues for the year, underscoring the significance of Aramco’s contributions to the Saudi government.
Aramco’s Chief Executive Amin Nasser emphasized the company’s strong financial position, even after significant dividend payouts and investment in growth projects. The company reported capital investments of $49.7 billion in 2023, with forecasts ranging between $48 billion and $58 billion for the current year.
The company’s strategic focus includes investments in upstream projects, particularly in gas, which will not only support oil export capacity but also contribute to increased production of associated liquids from gas extraction. Nasser expects global oil demand to reach 104 million barrels per day in 2024, reflecting confidence in the industry’s resilience.
The Saudi government’s Vision 2030 initiative, aimed at diversifying the economy, plays a crucial role in Aramco’s strategic planning. The sovereign Public Investment Fund (PIF), which owns a significant stake in Aramco, is central to this economic transformation.
Regarding Aramco’s capacity plans, the company has reverted to a production target of 12 million barrels per day, following government directives to halt expansion plans. This decision is expected to save approximately $40 billion in capital investments over the next few years, with priorities set for financial allocations including sustaining capital expenditures, dividends, growth projects, and reducing debt.
Aramco’s shares have shown resilience in the market, trading slightly above their IPO price despite economic challenges and fluctuations in the oil market. While there are speculations about the Saudi government selling more shares of Aramco, company officials refrained from commenting on future share offerings.
[Source: Reuters]
