DUBAI: Saudi Aramco, the world’s biggest oil company, reported a better performance in the third quarter of 2020, but was still significantly impacted by the global economic downturn in the wake of the COVID-19 pandemic lockdowns.
The company, listed on the Tadawul exchange in Saudi Arabia, said that net income for the three months to the end of September was $11.8 billion. Although this was nearly halved from the comparable period of last year, it represents an 80 percent increase on the previous quarter, when the impact of the pandemic on global oil markets was at its peak.
Amin Nasser, president and chief executive, said: “We saw early signs of a recovery in the third quarter due to improved economic activity, despite the headwinds facing global energy markets.”
Aramco declared a dividend of $18.75 billion for the quarter, fulfilling the pledge it made to shareholders at the time of the record-breaking initial public offering (IPO) last year. Nasser said: “We maintained our commitment to shareholder value.”
Total free cash flow in the quarter amounted to $12.4 billion. Given the backdrop of comparatively low oil prices and reduced demand for crude around the world, a decline in profits had been expected. Aramco’s profits were much higher than any of its peer group of major oil companies. Aramco shares gained 1 percent in early trade.
The quarter was the first time financial results from SABIC, the petrochemicals group bought by Aramco from Saudi Arabia’s Public Investment Fund, were included in the figures.
Nasser said: “Aramco’s integration with SABIC is proceeding as planned. Our resilience is supported by our unique scale, low upstream carbon intensity and low production costs. As the global economic and social landscape evolves, these strengths and our continued drive to lower greenhouse gas emissions mean we are well positioned to support the energy needs of the global economic recovery.”
Aramco is reviewing its capital expenditure budgets for next year, with around $20 billion earmarked for new investment in 2020. “We continue to adopt a disciplined and flexible approach to capital allocation in the face of market volatility. We are confident in Aramco’s ability to manage through these challenging times and deliver on our objectives,” he added.
Aramco is committed to big projects as part of the “circular carbon economy” to combat global warming, and delivered the first cargo of cleaner ‘blue’ ammonia to Japan during the quarter “further strengthening our focus on new and innovative solutions that contribute to the global energy transition.”
On the current market outlook, Nasser said: “The third quarter of 2020 saw early signs of a recovery in global energy markets as some governments across the world eased COVID- 19 related restrictions, providing stimulus for improved economic activity.
“The demand for crude started to rise, which was reflected in stronger crude oil prices, compared to the previous quarter. This increasingly favorable economic environment, together with Aramco’s low cost of production and unique operating model, resulted in improved earnings and cash flows for the third quarter,” he added.
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