Saudi Aramco has a tremendous first quarter as profits rise 30% | Business and Economic News

Saudi Aramco’s profits rose 30 percent in the first quarter of the year as COVID’s devastated economies revived and oil demand revived.

Saudi Aramco said on Tuesday that its profits rose 30% in the first quarter of the year compared to last year, lagging behind the highest crude oil prices. The results are that some of the world’s largest economies are emerging from recession and easing restrictions on the spread of vaccines against COVID-19.

The company’s financial results show a net profit of $ 21.7 billion in the first three months of the year, when Aramco’s profits rose to $ 16.7 billion in 2020, when the first effects of the coronavirus pandemic began to significantly drop global demand. for oil. Crude Brent fell about $ 20 a barrel to its lowest point last year.

Saudi Arabian Oil Co. said the increase in profits is mainly due to the impact of high crude oil prices, which have averaged $ 60 a barrel in recent months. Prices have risen steadily so that producers have a balance in the market between the increased demand for crude and disciplined cuts in production.

Aramco produced 9.2 million barrels per day in 2020, an average of 8.6 million barrels per day in the first quarter of 2021.

The company has confirmed that it will pay the dividend promised to shareholders $ 18.75 million this quarter, or $ 75 billion a year. Almost all of this payment is directed by the Saudi government, which owns more than 98 percent of the company, and the remaining 1.7 percent is traded on the Saudi stock exchange.

The payment, however, exceeds Aramco’s current cash flow of $ 18.3 billion. Aramco saw year-over-year earnings nearly halve to $ 49 billion in 2020, $ 88 billion in 2019, and $ 111 billion in 2018.

Still, the Saudi company remains one of the most valuable companies in the world.

Aramco’s higher profits will come as a welcome to the Saudi government, as it continues to have high confidence in the company’s oil barrels.

Aramco, which produces all the oil and gas in the kingdom, is instrumental in its efforts to diversify the economy of Crown Prince Mohammed bin Salman (MBS). The prince intends to transfer Aramco’s property to the country’s sovereign wealth fund and use the profits for foreign and local investment, with the aim of boosting new sectors and creating millions of new jobs for Saudi youth.

Aramco CEO Amin Nasser said the gains in the first quarter were a sign that “better days are coming”.

“While some headwinds are still maintained, we are well positioned to meet the world’s energy needs when the economy begins to recover,” he said.

The company said in its earnings report that while developing worldwide vaccination programs to combat COVID-19 is a far cry from the pandemic.

The company recently announced a $ 12.4 billion deal to sell its leasehold rights to its oil pipeline to an investor consortium led by EIG Global Energy Partners. The sale aims to raise money for Aramco to maintain its dividend commitment to shareholders.

In an interview with MBS last week, he revealed that there are talks to sell a 1 percent stake in Aramco to a major energy company. Although he did not provide further details, speculation revolves around potential buyers from China, which is the world’s largest oil importer.