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Saudi Aramco hits $121b profit in 2023 amid lower oil prices

By Ologeh Joseph Chibu

Saudi Aramco has announced a profit of $121 billion for the previous year, down from its record-setting 2022 earnings, primarily due to decreased energy prices.

Despite the decline, this still marked the company’s second-highest profit ever, reflecting ongoing efforts by OPEC+ members to curb production in an attempt to bolster global energy prices.

However, the reduced earnings pose challenges for the kingdom as it undertakes ambitious development projects under the leadership of its assertive crown prince, aiming to diversify its revenue sources away from oil.

In 2022, Aramco reported a profit of $161 billion, likely the largest ever reported by a publicly traded company.

“The decrease mainly reflects the impact of lower crude oil prices and lower volumes sold, and weakening refining and chemicals margins,” stated the company in its filing to the Tadawul stock market.

Despite the lower profits, Aramco increased dividends to its shareholders to over $31 billion in the fourth quarter, according to filings.

The energy giant had scheduled a conference call for Monday to discuss its financial results.

Aramco’s overall revenue for the year added up to $440 billion, down from $535 billion in 2022.

“Our resilience and agility contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds,” commented Aramco CEO Amin H. Nasser.

Aramco, formally known as the Saudi Arabian Oil Co., maintained its output at 12.8 million barrels of oil per day, in compliance with directives from the Saudi government to keep production levels stable.

Saudi Arabia, a leading member of the OPEC cartel, has collaborated with Russia and other non-OPEC allies to limit production in an effort to bolster global oil prices. Benchmark Brent crude traded below $82 a barrel on Sunday.

With a market value of $2 trillion, Aramco ranks as the world’s fourth most valuable firm, trailing behind Apple, Microsoft, and NVIDIA. Aramco’s stock traded slightly up on the Tadawul at $8.64 a share Sunday.

The kingdom’s abundant oil resources, coupled with low production costs, position it as one of the world’s most cost-effective crude oil producers. Crown Prince Mohammed bin Salman aims to leverage this oil wealth to transition the kingdom away from oil dependency, as evidenced by projects like the $500 billion Neom futuristic desert city.

However, environmental activists have criticized Aramco’s profits amidst growing global concerns about fossil fuel consumption exacerbating climate change.

Recently, Prince Mohammed transferred an additional 8 percent of Aramco shares to the country’s prominent sovereign wealth fund, valued at over $160 billion. While the majority of the company remains under the control of the Al Saud royal family, a fraction is traded on the Tadawul stock market.

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