Saudi Aramco, the state-owned oil giant, has announced substantial dividends despite a decline in annual profits compared to the previous year. The company paid out dividends totaling nearly $100 bn in 2023, marking a 30% increase from the previous year, as stated in its annual accounts. While overall profits decreased by nearly 25% to $121.3 bn, this figure still stands as the second-highest reported by Saudi Aramco, The Guardian reported on March 10.
The significant decrease in profits can be attributed to a drop in oil prices and lower sales volumes compared to the previous fiscal year. The price of Brent crude, the benchmark oil price, experienced fluctuations, falling from nearly $120 a barrel in the middle of 2022 to as low as $67 a barrel in 2023, before rebounding to around $82 per barrel. Despite these challenges, Aramco's profits in 2023 remain substantial, second only to the record-breaking $161.1 bn reported in 2022.
The dividend payout, while welcomed by shareholders, is likely to draw criticism from campaigners concerned about the soaring profits of energy companies amid a global cost of living crisis. The juxtaposition of record dividends with household financial struggles has sparked outcry, particularly in light of generous executive bonuses. For instance, the £8 mn pay package of BP's new CEO was recently condemned as "sickening."
Aramco's dividend payout is expected to be mirrored by other major oil firms worldwide. The Institute for Energy Economics and Financial Analysis (IEEFA) forecasted that BP, Shell, Chevron, ExxonMobil, and TotalEnergies would collectively pay dividends exceeding the $104 billion distributed in 2022.
Aramco's investment strategy remains robust despite the profit dip. Capital expenditures for 2023 totaled $49.7 bn, up from $38.8 bn in the previous year, with projections indicating continued growth in investment, particularly in non-oil projects. Amin H Nasser, Aramco's president and chief executive, emphasized the company's commitment to creating and capturing additional value from its operations. Aramco plans to maintain a production level of 12 mn barrels per day (bpd) following a directive from the Saudi government to halt its production increase plans.
Looking ahead, Aramco anticipates capital expenditures ranging from $48 bn to $58 bn in the coming year, underscoring its confidence in the enduring role of oil and gas in the global energy landscape.
Comments (0)