An employee at a Saudi Aramco oil processing facility, a Saudi Arabian state-owned oil and gas company, at the Abqaiq oil field.
Stanislav Krasilnikov | TASS | Getty Images
Oil giant Saudi Aramco reported a 44% decline in full-year 2020 results, but maintained its $ 75 billion dollar dividend, with CEO Amin Nasser describing the past twelve months as one of the most “challenging years” in recent memory. .
Saudi Aramco, Saudi Arabia’s colossal state oil company, reported net profit of $ 49 billion in 2020, down from $ 88.19 billion in 2019. The result was slightly below analyst expectations of $ 48.1 billion, but represents still the highest of all listed companies worldwide.
“In one of the most challenging years in recent history, Aramco demonstrated its unique value proposition through its significant financial and operational flexibility,” Saudi Aramco Chief Executive Amin Nasser said in the company’s statement on Sunday.
Aramco said revenues were impacted by lower crude oil prices and volumes sold, and weakened refining and chemicals margins.
The company also said it expects to cut capital expenditures over the next year, and lowered its spending outlook to about $ 35 billion from a range of $ 40 billion to $ 45 billion earlier.
Free cash flow fell nearly 40% to $ 49 billion, well below the level of the long-awaited dividend. Aramco also declared a $ 75 billion payout for 2020, despite concerns it would take on additional debt to keep it going.
“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track and as the macro environment improves, we see a pick-up in demand in Asia and positive signs elsewhere,” he added.
Shares in the top Western oil and gas companies, including Royal Dutch Shell and BP, fell to multi-year lows in 2020, as the coronavirus pandemic wreaked havoc on the global economy and led to a historic oil price collapse. Exxon Mobil, the largest US energy company, posted its first annual loss.
Escalating attacks on oil facilities
Aramco’s facilities have been the target of several attacks by the Yemeni Houthi rebels – attacks that have escalated this year, with Saudi Arabia and Iran, the latter of which backs the rebels, straddling Yemen’s bloody civil war.
Houthi missile fires in parts of Saudi Arabia that hit Aramco facilities earlier in March brought oil prices from over $ 70 a barrel to its highest level in more than a year. Most recently, the rebels claimed responsibility for drone strikes against an Aramco facility in the capital Riyadh on Friday, sparking a fire that was quickly brought under control without casualties, according to the Saudi energy ministry.
When asked how the company wanted to assure investors and the global community that its infrastructure was well protected and prepared to avoid serious disruptions to its operations, CEO Amin Nasser emphasized that the attacks “had no impact on business.”
“I think the most important thing is the willingness of our people,” Nasser told The Washington City Times at a press conference following the revenue announcement. “There is always something you learn with every attack, and you go and improve your emergency response … and make sure you have everything you need to restore these facilities if they come under attack.”
“We have learned a lot, we have been able to demonstrate with 99.9% reliability that in any scenario we are able to put the facility back up and running and ensure the safety and security of our people while ensuring it. that the delivery to our customer has been fulfilled, ”added Nasser.
“The attack on Riyadh is a good demonstration, within hours of putting out the fires and ending the investigation, we started to (re) set up the facility,” he said. “Today the Riyadh refinery is underway. So it is a demonstration of the capacity and emergency plan and emergency response of first responders.”
Nasser also expressed optimism about the outlook for oil demand in 2021.
“We’ve seen price improvement, with decline on demand, a much better recovery. China is also very close to pre-pandemic levels,” said the CEO.
“ With more deployment of the vaccines, we will see more demand recovery, so we are very optimistic about 2021 in terms of demand growth, especially in the second half, and we can see prices responding so far to what we are on. see the market. , we look forward to a much better year in 2021. ”
International benchmark Brent crude oil stands at $ 64.53 a barrel, about 25% higher than a year ago and a whopping 73% higher than a year ago.
Several oil analysts have raised their vaccination and demand confidence price predictions for 2021, with Goldman Sachs predicting an increase to $ 80 a barrel in the third quarter of this year – unimaginable when WTI prices first hit in history. about one turned negative. year ago.