Saudi Aramco profits slump 73pc on low oil price

RIYADH (AFP) – Energy giant Saudi Aramco said yesterday its net profit for the second quarter plunged a massive 73 per cent due to sharply lower oil prices as the coronavirus crisis undercuts global demand.

The company posted a net profit of USD6.6 billion for the three months to June 30, compared to USD24.7 billion in the same period of 2019.

“Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results,” CEO Amin Nasser said in a statement.

Aramco’s net profit for the first half of the year also dived, by 50 per cent to USD23.2 billion, compared to USD46.9 billion over the same period last year.

Saudi Arabia, the world’s biggest crude oil exporter, has been hit hard by the double whammy of low prices and sharp cuts in production that combined to severely impact oil income.

A man views the exchange board at the Stock Exchange Market (Tadawul) bourse in Riyadh displaying Aramco shares. PHOTO: AP

Oil prices dropped to a two-decade low below USD20 a barrel in in April and May as the novel coronavirus pandemic dampened demand, before recovering to around USD44 a barrel after OPEC+ producers agreed to record output cuts. Following the move, Saudi oil production dropped to 7.5 million barrels per day (bpd) in June, compared to last year’s average of 10 million bpd.

Aramco’s profits were also impacted by losses posted by Saudi Basic Industries Co. (SABIC), the petrochemicals giant that it acquired for USD69 billion in a deal agreed in 2019 and completed in June this year. Saudi Aramco was listed on the Saudi bourse in December following the world’s biggest initial public offering, generating USD29.4 billion in the sale of 1.7 per cent of its shares.

Nasser said Aramco would distribute USD18.75 billion in dividends for the second quarter to keep its listing promise of distributing at least USD75 billion in dividends a year for five years.

“Despite COVID-19 bringing the world to a standstill, Aramco kept going,” he said.

US technology firm Apple last week replaced Aramco as the world’s most valuable company after its capitalisation grew to USD1.9 trillion, compared to USD1.76 trillion for Aramco.