One year after its hitherto historic IPO, the largest oil company in the world, the Saudi Aramco, suffers the setbacks from the drastic drop in consumption of crude oil caused by the Covid-19 pandemic. Its net profits plummeted 44.6 percent in the third quarter of this year while the company continues to borrow to maintain the dividend distribution promised to its shareholders.
The company reported this Tuesday that during the last three months your income reached 44.2 billion Saudi riyals (about 10,120 million euros), far from the 79,840 million riyals that it registered in the same period of the previous year on the eve of the largest public operation to sell shares in history. Since then 2 percent of the company has been listed on the Saudi Tadawul stock market. The remaining 98 percent is in the hands of the Saudi state.
“The results were as expected”, he tells EL MUNDO Robin Mills, Middle East energy expert and director of Emirati consultancy Qamar Energy. “The actions have enjoyed the support that the sustained commitment to pay the dividend of $ 75 billion which is sustainable for now but would need oil prices to rise next year to avoid continued accumulation of debt, “warns Mills.
True to its promise and even though sales are down 25 percent, Aramco will distribute this quarter a dividend of 18,750 million of dollars (about 16,100 million euros). A measure that has helped maintain its shares, which registered annual drops of 2.3 percent compared to the 50 percent crashes of rivals such as Exxon, BP or Shell. Dividends are key to mitigating the country’s tax deficit.
“We are seeing the first signs of a recovery due to improved economic activity despite headwinds hitting global energy markets,” he said. Amin Naser, CEO of Aramco, who recognizes -however- the volatility in a situation marked by the new containment measures adopted in Europe to contain the spread of Covid-19, which chilled expectations.
Proof of this uncertainty, crude oil prices this week registered their lowest in the last five months. The Organization of Petroleum Exporting Countries (OPEC) and its allies – led by Saudi Arabia and Russia – who a historic production cut was agreed last April, are now suggesting additional measures to cut production even further or postpone the end of current restrictions in an attempt to avoid price falls.
In an especially bleak outlook, Aramco sells its “strength” and boasts of having doubled the previous quarter’s earnings while slowing down your major projects. “It is not surprising that some capital commitments, particularly the chemical project, have been delayed, but spending will have to continue to maintain oil capacity and national gas production targets,” Mills predicts.
“The integration of Aramco with Sabic [una de las mayores petroquÃmicas del planeta] progress according to plan. Our resilience is supported by our unique scale, low carbon intensity and low production costs “, Naser emphasizes, confident that the Saudi giant is prepared to” meet the energy needs of the global economic recovery “.
With 9.2 million barrels of crude oil per day during the first nine months of 2020, Aramco also boasts of having signed during the third quarter of 2020 the discovery of two fields in the north of Saudi Arabia, one for oil and gas and the other exclusively for gas. This is not an easy year for the Saudi Arabian flag company. It has lost the first position among the most profitable listed companies in the world, surpassed by Apple, and this next Thursday it could give up the title of having starred in the largest IPO in history in favor of the Chinese Ant Group, a “fintech “linked to Alibaba that aspires to reinvent” online “banking.
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