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Falling Oil Prices Cause Saudi Aramco’s Profit to Slip 19 Percent

Saudi Aramco on Tuesday reported first-quarter net profit of $31.9 billion, down about 19% from the same period last year, mainly due to lower oil prices.

But oil prices are still relatively strong, and Saudi Aramco continues to make huge profits.Relatively low costs.

Aramco’s main owner, the Saudi government, recently orchestrated production cuts by a group of countries known as OPEC Plus. But Aramco is investing to boost production, dismissing concerns that climate change risks could weigh on fossil fuel markets in the coming years.

Aramco Chief Executive Amin Nasser said in a statement on Tuesday: “We believe oil and gas will remain an important component of the global energy mix for the foreseeable future.

The company also continues to sign refining and chemical deals, primarily in Asia, with the aim of securing markets for oil. Recently, Aramco joined the development of a large oil complex in China and agreed to buy his 10% stake in Rongsheng Petrochemical, another Chinese company, for $3.6 billion. Aramco said the two agreements would give the Saudi company the right to supply him with a total of 690,000 barrels of oil per day.

International benchmark Brent crude prices averaged around $81/barrel in the first quarter of 2023, compared to around $100/barrel in the same period last year.

Like its Western rivals, Aramco is under pressure to give back more money to its shareholders. In this case, it is the cash-hungry Saudi government, primarily to fund its development plans. Aramco said it will pay out a $19.5 billion dividend in the fourth quarter, up 4% from the previous quarter.

Aramco also said it would consider devising a mechanism to add a “performance-linked” dividend to the base dividend. Investment banker RBC Capital Markets analyst Biraj Borkhataria estimated that Aramco could pay an additional $12 billion to $18 billion in 2023. In 2022, the company paid out his $75 billion dividend.

Volkataria said that more orders would increase the company’s dividend from about 3.5% to about 4% of its share value, adding that such a dividend would be a percentage below that of the Western oil giants. .

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