The world’s largest crude oil exporter Saudi Aramco continued to report losses in its third-quarter net profit report following a slump in oil demand due to the coronavirus pandemic.
In its recent third-quarter report, Saudi Aramco’s net profit dropped by 44.6% which is an improvement compared to the previous quarter’s 73% dive in profits which earned the company only $6.57 billion.
The state-owned crude oil exporter in a statement on Tuesday (November 3) said that the coronavirus pandemic has resulted in market volatility and affected the global economy, particularly that of oil-producing economies. As a result, the Saudi company’s net profit for the first nine months of 2020 also dropped 48.6 percent to $35 billion.
Despite the setback, the Saudi government’s most profitable business venture posted a net income of $11.8 billion or almost half of the $21.3 billion net profit posted in the same quarter last year.
Saudi Aramco President and CEO Amin Nasser said:
“We saw early signs of a recovery in the third quarter due to improved economic activity, despite the headwinds facing global energy markets. Meanwhile, we maintained our commitment to shareholder value by declaring a dividend of $18.75 billion for the third quarter.”
As in the previous quarter, despite the slump in profits, the world’s most valuable listed company has committed to pay $18.75 billion in dividends in the third quarter.
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The Saudi company earlier pledged to pay $75 billion in annual dividends after floating a part of its shares in the world’s largest Initial Public Offering in 2019.
Meanwhile, third-quarter capital expenditure for Aramco was reported at $6.4 billion.
“We continue to adopt a disciplined and flexible approach to capital allocation in the face of market volatility. We are confident in Aramco’s ability to manage through these challenging times and deliver on our objectives,” Nasser said.
Aramco maintains optimism on oil recovery
The company’s total hydrocarbon production for the first nine months of 2020 was at 12.4 million barrels oil equivalent per day of which 9.2 million barrels per day was crude oil.
As the world’s biggest crude exporter, the company has been hit hard by low crude oil prices and drops in production.
Oil recorded negative prices on April 20 due to lower consumption forcing the Organization of Petroleum Exporting Countries to cut output by 10 million barrels a day just to stabilize prices.
During the height of lockdowns in the second quarter, one-third of the global oil demand has dropped forcing oil-producing countries like Saudi Arabia to decrease production or face huge losses.
However, company officials are optimistic that the industry is well on its way to recovery. Saudi Aramco also achieved a record historic single-day natural gas production of 10.7 billion standard cubic feet per day on August 6 from both conventional and unconventional fields.
Nasser also stressed that the company has been making progress despite the pandemic with its shipment of the world’s first blue ammonia for zero-carbon power generation in Japan that will strengthen the firm’s focus on new and innovative solutions for the global energy transition.
The world’s first cargo of high-grade blue ammonia is a collaboration between Saudi Aramco, SABIC, and the Institute of Energy Economics of Japan which involves capturing 50 tons of associated carbon dioxide emissions for use in methanol production and enhanced oil recovery.
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