Saudi Aramco has reported net income of $31.88 billion in the first quarter of 2023, up 3.75 percent from earnings recorded in the fourth quarter of 2022.
The oil giant said in a statement to that the increase in quarterly net profit was due to lower income taxes and zakat, lower operating expenses, and higher financial and other revenues.
“The results reflect Aramco’s continued high reliability, focus on costs and our ability to respond to market conditions while generating strong cash flows and continuing to strengthen the balance sheet,” said Amin Nasser, Chief Executive Officer of Saudi Aramco.
The energy giant’s first-quarter net income is more than three-quarters of the combined first-quarter profit of $40.5 billion reported by five oil majors: BP and Shell in the UK, ExxonMobil and Chevron in the US, and TotalEnergies in France.
However, Aramco’s net income fell 19.25 percent year-on-year in the first quarter as the company reported profit of SR148.03 billion for the same quarter of 2022.
“Global crude oil prices declined in the first quarter of 2023 mainly due to macroeconomic events that contributed to market volatility. Aramco believes that its low-cost upstream production and strategically integrated downstream operations mean it is well-positioned to withstand fluctuating commodity prices,” the company said in a statement.
Aramco had reported profits totaling SR603.77 billion in 2022, allowing Saudi Arabia to record its first annual budget surplus in almost a decade. Those gains were helped by rising energy prices after Russia launched its war against Ukraine in February 2022, with sanctions restricting Moscow’s oil and natural gas sales in western markets.
Nasser also pointed out that oil and gas supplies are critical components as the world moves towards a sustainable future. He explained that Aramco is working hard to develop green energy solutions that will facilitate this transition.
“Our intention is to continue to be a reliable energy provider capable of providing more sustainable energy solutions and supporting efforts towards an orderly energy transition.
“As we work to further reduce the carbon footprint of our operations and add new lower-carbon energy options to our portfolio, I am confident in the contributions we will make,” added Nasser.
The CEO further noted that in the first quarter, Aramco reached agreements to expand its downstream business abroad, including investments in China and the completion of a $2.76 billion acquisition of Valvoline Inc.’s product business .
“Our growth strategy remains on track and during the quarter we made significant progress in strategically expanding our downstream business, announcing a key acquisition in the US and significant investments and partnerships in China and South Korea,” added Nasser.
It also noted that the downstream strategy is gaining momentum as Aramco leverages cutting-edge technologies to increase its liquid-to-chemical conversion capacity to meet anticipated petrochemical demand.
In the first quarter of 2023, Aramco continued to demonstrate its track record of reliable operations with total hydrocarbon production of 12.8 million barrels per day, the statement said.
The statement also noted that crude used by Aramco’s downstream operations accounts for 45 percent of the company’s crude oil production.
Meanwhile, Aramco also plans to introduce a quarterly performance-related dividend mechanism in addition to the base dividends it currently pays.
According to the statement, Aramco intends these to be 50 to 70 percent of the group’s annual free cash flow, net of the base dividend and other amounts, including external investments, determined by the annual results.
The statement added that the $19.5 billion dividend in Q1 2023 will be paid in Q2.
Higher dividends are expected to boost revenues for Saudi Arabia as it owns more than 90 percent of Saudi Aramco’s shares.
Aramco shareholders also approved the board’s recommendation to increase the company’s capital from SR70 billion to SR90 billion