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Aramco reports drop in Q1 profits but ups capital expediture

Exploration & Production

Aramco has reported a 19% drop in Q1 profits compared to the Q1 2022 total as a result of lower oil prices, but has recorded growth in capital expenditure 

Net income was still a healthy US$31.9bn, compared with the Q1 2022 total of US$39.5bn, and follows a record profit of more than US$161bn for 2022. Aramco said it will pay US$19.5bn in dividends for the first quarter, in line with the previous quarter.

Commenting on the Q1 results, Aramco president & CEO Amin H. Nasser, said, “The results reflect Aramco’s continued high reliability, focus on cost and our ability to react to market conditions, as we generate strong cash flows and further strengthen the balance sheet. Reinforcing our commitment to maximise long-term shareholder value, we are also announcing our intention to introduce a mechanism for performance-linked dividends, in addition to the base dividend the company currently distributes.

“Our growth strategy remains on track and we made significant progress on the strategic expansion of our Downstream business during the quarter, announcing a key acquisition in the US as well as important investments and partnerships in China and South Korea. Our global Downstream strategy is gaining momentum, and we are leveraging cutting-edge technologies to increase our liquids-to-chemicals capacity and meet anticipated demand for petrochemical products.

 “We are also moving forward with our capacity expansion, and our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future.

 “Our intention is to continue to be a reliable energy supplier with the ability to provide more sustainable energy solutions, supporting efforts to achieve an orderly energy transition. By working to further reduce the carbon footprint of our operations, and adding new lower-carbon energy options to our portfolio, I am confident about the contributions we will make.”

Highlighted by the company were iktva signings valued at around US$7.2bn expected to further strengthen supply chain efficiency; and an agreement with Linde Engineering for the development of a new ammonia cracking technology, which supports the advancement of lower-carbon energy solutions.

In upstream developments, meeting the growing domestic gas demand remains a strategic priority for Aramco, and the company successfully advanced multiple gas projects during the quarter, including the compression projects at the Haradh and Hawiyah fields, and the Hawiyah gas plant expansion, which are expected to come onstream this year. Upstream capital expenditure for the first quarter of 2023 was US$6,755mn, an increase of 16% compared to US $5,823mn for the same period in 2022, in line with progress associated with crude oil increments to raise the MSC to 13mn bpd, and also reflecting increased development activity for gas projects.

Downstream capital expenditure for the first quarter of 2023 was US$1,906mn, an increase of 15.8% compared to US$1,646mn for the same period in 2022. This increase was mainly due to an increase in turnaround activities and various growth project developments.