• Monday, May 27, 2024
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BusinessDay

Saudi Aramco’s 2019 profit slumped 21% on low oil price, cuts spending amid price war

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In response to the double-whammy impact of oil crash and spread of coronavirus, the world’s most profitable company, Aramco, has announced plans to cut spending by 24percent to between $25billion and $30billion in 2020.

In its full-year result for the period ended December 31, profit tanked almost 21percent on the back of lower crude oil prices and a drop in production volumes. Although the financial period closed before the full effects of the coronavirus and the end of the OPEC+ oil output agreement. Drone and missile attacks on two of its biggest facilities in September temporarily slashed production by more than half, but didn’t cause a big surge in price.

During the year under review, Aramco’s posted net profit of 330.69 billion Saudi riyal ($88.11 billion) after zakat and tax, down from 416.52 billion riyals in 2018. However, the oil-giant still remains the most profitable company in the world, ahead tech-giants such as Apple, Alphabet (owner of Google) and big Asian banks.

President and CEO Amin Nasser said “2019 was an exceptional year for Saudi Aramco

“Our unique scale, low costs, and resilience came together to deliver both growth and world-leading returns, while also maintaining our position as one of the world’s most reliable energy companies,” he said.

Khalid al-Dabbagh, Chief Financial Officer said the company can sustain a low break-even oil price and has “massive capacity” to borrow, but does not need additional debt.

Aramco, the world’s top oil-producing company raised $29.4 billion in a record initial public offering in December last year.

In recent weeks, Saudi Arabia has announced plans to ramp up production in an oil price war with Russia that has sent the global prices plunging, tumbling below $30 on Monday.

The oil-giant has been told to increase its maximum production capacity to 13million barrels a day, up from 12mbpd.

Aramco shares fell as much as 1percent on Sunday, extending the decline this year to about 19percent. Aramco’s market value has slumped from a peak of over $2 trillion in December to about $1.5 trillion. The company reiterated its desire to pay a dividend of $75bn in 2020 as it had pledged ahead its market listing.