Hadeel Al Sayegh
DUBAI (Reuters) – Saudi Arabia’s state oil giant Aramco (TADAWUL:) expects to pay $31 billion in dividends to the Saudi government and its shareholders despite reporting lower first-quarter profit on Tuesday due to lower oil prices and sales volumes . .
The Saudi government, which directly owns about 82.2% of Aramco, relies heavily on the company’s payouts, which also include royalties and taxes.
The kingdom, the world’s largest oil exporter, is spending billions of dollars to diversify its economy away from oil.
Aramco reported a 14% decline in first-quarter net profit to $27.3 billion in the three months to March 31, in line with analysts’ estimates and down from $31.9 billion a year earlier, according to the company’s earnings report.
The company announced basic dividend payments for the first quarter totaling $20.3 billion and a performance-related dividend distribution of $10.8 billion to be paid in the second quarter.
The company said it expects to declare total dividends of $124.3 billion in 2024, of which $43.1 billion will be performance-related dividends.
OPEC+ has implemented a series of production cuts since late 2022 amid rising output from the U.S. and other non-member producers and concerns about demand as major economies face high interest rates.
averaged about $83.50 in 2024, while Saudi Arabia needs oil at $96.2 to balance its 2024 budget, the IMF predicts. With a projected budget deficit of 79 billion rials ($21.07 billion) this year, the kingdom may shelve some of its many megaprojects.
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Finance Minister Mohammed Al Jadaan recently said the kingdom’s Vision 2030 plan to transform the economy will be adjusted as needed, with some projects being scaled back or expanded and others being accelerated amid the challenging environment.
The kingdom could also attract up to 138 billion riyals ($36.80 billion) in funding in 2024, up from $23 billion originally estimated at the start of the year.
In late January, the Saudi government ordered Aramco to abandon its expansion plan to increase production capacity to 13 million barrels per day (bpd), returning to its previous target of 12 million bpd.
Two projects that were part of the expansion plan – Safaniya and Manifa – are now on hold, while three others are ongoing.
Aramco said Tuesday that Marjan and Berri are expected to come online in 2025, adding 300 million bpd and 250 million bpd respectively, while Zuluf plans to add 600 million bpd by 2026.
Maximum production capacity will be optimized to maintain it within the target of 12 million barrels per day, despite ongoing projects.
Saudi Arabia is ready to sell more shares in energy giant Aramco, three people familiar with the matter told Reuters in February, and has floated Citigroup, Goldman Sachs and HSBC for sale, according to one of the people.
($1 = 3.7502 rials)