Saudi Aramco profits slump 73% as pandemic chokes oil sales

RIYADH: Energy giant Saudi Aramco said Sunday its net profit for the second quarter plunged a massive 73% due to sharply lower oil prices as the coronavirus crisis undercuts global demand.

The company posted a net profit of US$6.6 billion for the three months to June 30, compared to US$24.7 billion in the same period of 2019.

“Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results,” CEO Amin Nasser said in a statement.

Aramco’s net profit for the first half of the year also dived, by 50% to US$23.2 billion, compared to US$46.9 billion over the same period last year.

Saudi Arabia, the world’s biggest crude oil exporter, has been hit hard by the double whammy of low prices and sharp cuts in production that combined to severely impact oil income.

Oil prices dropped to a two-decade low below US$20 a barrel in in April and May as the novel coronavirus pandemic dampened demand, before recovering to around US$44 a barrel after OPEC+ producers agreed to record output cuts.

Following the move, Saudi oil production dropped to 7.5 million barrels per day in June, compared to last year’s average of 10 million bpd.

Aramco’s profits were also impacted by losses posted by Saudi Basic Industries Co (SABIC), the petrochemicals giant that it acquired for US$69 billion in a deal agreed in 2019 and completed in June this year.

Saudi Aramco was listed on the Saudi bourse in December following the world’s biggest initial public offering, generating US$29.4 billion in the sale of 1.7% of its shares.

Nasser said Aramco would distribute US$18.75 billion in dividends for the second quarter to keep its listing promise of distributing at least US$75 billion in dividends a year for five years.

“Despite Covid-19 bringing the world to a standstill, Aramco kept going,” he said.

US technology firm Apple last week replaced Aramco as the world’s most valuable company after its capitalisation grew to US$1.9 trillion, compared to US$1.76 trillion for Aramco.