Saudi Aramco's 2020 net profit down 44.4% at $49 billion
26 March 2021
Energy giant Saudi Aramco has reported a 44.4 per cent slump in its 2020 net profit due to lower crude prices, as the coronavirus pandemic weighed heavily on global demand.
"Aramco achieved a net income of $49 billion in 2020," the company said in a statement - down from $88.2 billion in 2019.
For the full year, Aramco said its net profit stood at $49 billion against the $88.2 billion net profit reported in 2019.
"Aramco achieved a net income of $49 billion in 2020," the company said in a statement.
Aramco, the world’s biggest oil company, has seen falling profits since it began disclosing earnings in 2019.
While the fall in profits is sure to increase pressure on the Saudi government amidst an ongoing multi-billion dollar diversification of the company and the economy at large, Aramco claimed that its full-year 2020 results demonstrated exceptional resilience despite the macroeconomic impact of Covid-19 and delivering on its intended dividend payments toshareholders.
“In one of the most challenging years in recent history, Aramco demonstrated its unique value proposition through its considerable financial and operational agility. Our exceptional performance during such testing times owed much to the unwavering spirit and resilience of our employees, who set operational records and continued to meet the world’s energy needs both safely and reliably,” Aramco president and CEO Amin H Nasser, said.
“As the enormous impact of Covid-19 was felt throughout the global economy, we intensified our strong emphasis on capital and operational efficiencies. As a result, our financial position remained robust and we declared a dividend of $75 billion for 2020. At the same time, the accelerated deployment of digital technologies across the company significantly enhanced our performance and we continued to make progress on breakthrough low-carbon solutions,” he added.
The company’s revenues were impacted by lower crude oil prices and volumes sold, and weakened refining and chemicals margins.
Aramco declared a dividend of $75 billion for the year, saying the company continues to preserve a strong balance sheet and that its gearing ratio at 31 December 2020, was among the lowest in its industry. The company also reorted ROACE of 13.2 per cent, which it claimed to be the highest in the industry.
Capital expenditure in 2020 was $27 billion due to the implementation of optimization and efficiency programmes, representing a significant saving on capital expenditure of $33 billion in 2019.
The company expects capital expenditure for 2021 to be around $35 billion, significantly lower than the previous guidance of $40-$45 billion.
Aramco’s international bond issuance in the fourth quarter achieved record demand for a 50-year tranche and was 10 times oversubscribed compared to its initial offering size. This global investor interest demonstrated market confidence in the company’s long-term strategy and performance outlook.
In 2020, Aramco’s average hydrocarbon production was 12.4 million barrels per day of oil equivalent, including 9.2 million barrels per day (mmbpd) of crude oil.
In April, Aramco achieved the highest single day crude oil production in its history of 12.1 million barrels per day. The company achieved another milestone in August, producing a single-day record of 10.7 billion standard cubic feet per day (bscfd) of natural gas from its conventional and unconventional fields.
Aramco continued to make advances in cutting-edge technology and received a company record of 683 US patents in 2020 - among the highest in its industry.
Aramco said it maintained one of the lowest upstream carbon footprints in the industry, achieving an intensity of 10.5 kg of CO2 per barrel of oil equivalent in 2020. Upstream methane intensity was 0.06 per cent.
The company said it is also well positioned to capitalise on developments in hydrogen, given its scale, infrastructure, low costs and low upstream carbon intensity.
“One promising area is the conversion of hydrocarbons to hydrogen and then to ammonia, while capturing the CO2 created during the process.”
In August, Aramco exported the world’s first shipment of high-grade blue ammonia to Japan for use in zero-carbon power generation, a significant step towards sustainable hydrogen usage.
In January 2020, Aramco joined the Hydrogen Council as a steering member. The organisation promotes collaboration between governments, industry and investors to provide guidance on accelerating the deployment of hydrogen solutions globally.