Riyadh, Saudi Arabia – Saudi Aramco, the state-backed energy giant, has experienced a significant decrease in profits due to a reduction in production and a sharp decline in oil prices during the year 2023. Despite this decline, the company still managed to achieve the second-highest profit in its history, totaling $121 billion. This marked a 25% drop from the record-breaking year of 2022 when the company raked in $161 billion in profits.
In response to the decrease in profits, Saudi Aramco announced plans to increase dividends to $98 billion, a nearly 30% rise from the previous year. The decision to boost payments to shareholders comes as the company explores opportunities for investment in China. The Saudi Arabian government, which owns almost 95% of the company, benefitted from the bumper profits in 2022, leading to a budget surplus.
The decline in profits in 2023 was attributed to the drop in oil prices, which fell to $85 a barrel. To support oil prices, Saudi Aramco reduced its production, posing additional challenges to profitability. Despite these challenges, Aramco’s chief executive, Amin Nasser, expressed optimism about the company’s performance, citing resilience and agility in navigating economic headwinds.
Looking ahead, Saudi Arabia aims to diversify its economy by utilizing revenue from the energy sector to facilitate the transition. Nasser revealed plans for renewable energy investments within the country, alongside efforts to explore investment opportunities in China, where oil demand is on the rise. As discussions unfold regarding potential partnerships, including a stake in a collaboration with French carmaker Renault and China’s Geely on hybrid car engines, Saudi Aramco remains optimistic about the oil market’s outlook for 2024.
Nasser emphasized the healthy and growing demand for oil in China, positioning the company to capitalize on emerging opportunities in the market. As Saudi Aramco continues to navigate market dynamics and explore strategic investments, the outlook for the energy giant remains promising amidst evolving global trends and challenges.