Aramco sees 2nd quarter profits plunge

The Saudi Arabian Oil Company (Aramco) announced its results for the second quarter and first half of 2020 that saw a 73 per cent plunge in net profits to US$6.6 billion in the three months to June, down from $24.7 billion last time due to challenging market conditions caused by the COVID-19 pandemic.

In a statement, Aramco said it had navigated challenging market conditions that saw half-year net income fall from $46.9 billion in the corresponding periods of 2019 to $23.2 billion.

Capital expenditure was $6.2 billion in the second quarter and $13.6 billion for the first half of 2020. Aramco said it continues to implement its capital spending optimisation and efficiency programme, and expects capital expenditure to be at the lower end of the $25 billion to $30 billion range for 2020.

Despite continued global economic disruption and challenges facing the energy sector, Aramco continued to deliver on its commitment to shareholders by declaring a dividend of $18.75 billion for the second quarter, compared to $13.4 billion for the second quarter of 2019.

Commenting on the results, Aramco President & CEO Amin H. Nasser, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.

“Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter.

“We will continue to pursue our long-term growth and diversification strategy to capture unrealized and additional value from every hydrocarbon molecule we produce – driving global commerce and enhancing people’s lives. The completion of our historic acquisition of a 70 per cent stake in SABIC is yet more evidence of that forward momentum and a testament to our healthy financial position.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world.”

To meet future global and domestic energy demand, Aramco stated that it continues to expand its gas business. In line with this strategy, the Fadhili Gas Plant reached its full production capacity of 2.5 billion standard cubic feet per day during the second quarter, after successfully completing its commissioning activities.