Industry

Aramco reports strong performance and capex growth

Aramco's gas expansion is one of the factors behind the increase in capital expenditure. (Image source: Aramco)

Aramco has reported profits of US$29.2 bn in Q2 2024 and US$56.3bn for H1 2024, slightly down on the corresponding periods of 2023, and expects to issue total dividends of US$124.2bn this year, according to its latest results

Aramco’s capital expenditure in the second quarter rose nearly 14% year-on-year to US$12.1bn, with H2 capex standing at US$23bn compared with US$19.2bn in the first half of 2023. Upstream capex rose particularly strongly, (24% in H2 2024 compared with H2 2023), reflecting progress associated with crude oil increments to maintain maximum sustainable capacity (MSC) at 12 mn bpd, and continued development of multiple gas projects to support the strategic expansion of the gas business.

Aramco president & CEO Amin H. Nasser said, “We have delivered market-leading performance once again, with strong earnings and cash flows in the first half of the year. Leveraging these strong earnings, we continued to deliver a base dividend that is sustainable and progressive, and a performance-linked dividend that shares the upside with our shareholders.

“We have also continued to create and deliver both value and growth, as demonstrated by the positive investor response to the government’s secondary public offering of Aramco shares and our recent US$6bn bond issuance."

Operational performance

In terms of operational performance, Aramco highlights progress in key strategic areas, notably its strategic gas expansion, with the announcement of contract awards worth more than US$25bn as it targets sales gas production growth of more than 60% by 2030, compared to 2021 levels. They include contracts for the Jafurah unconventional development Phase Two, Master Gas System Phase 3 and Fadhili Gas Plant expansion.

Aramco reports that in the second quarter, it achieved total hydrocarbon production of 12.3mn boed, while exploration activities resulted in seven oil and gas discoveries in the Kingdom’s Eastern Province and Empty Quarter, consisting of two unconventional oilfields, one Arabian light oil reservoir, two natural gas fields, and two natural gas reservoirs. Procurement and construction activities are proceeding on the Marjan and Berri and Zuluf crude oil increments.

Other highlights include partnering with leading car manufacturers on lower-emission vehicle technologies; expanding its new energies portfolio, with the acquisition of a 50% interest in the Blue Hydrogen Industrial Gases Company (BHIG); growing its global retail network with the acquisition of a 40% equity stake in Gas & Oil Pakistan Ltd; and the agreement with Pasqal to deploy the first quantum computer in the Kingdom.

In a presentation on the results, Aramco noted that oil demand growth is expected to continue in 2024 and beyond, amidst a robust economic outlook, highlighting record global oil demand in H1 2024 and demand forecasts of between 104.6mn bpd and 106.2 mn bpd for the second half of the year.

Saudi Arabia leads in recoverable oil reserves: Rystad Energy

Two Middle East countries feature in the top 5 countries with most recoverable reserves. (Image source: Adobe Stock)

Saudi Arabia tops the list of countries with the most recoverable oil, with 247bn barrels, according to new research from Rystad Energy

Iraq also features in the list of the top five countries with most recoverable oil, with 105bn barrels, coming in fifth place. The USA is second with 156bn barrels, Russia third with 143bn barrels and Canada fourth with 122bn barrels.

However, global recoverable oil reserves could be insufficient to meet demand unless there is a swifter transition to electric vehicles, according to Rystad Energy’s latest research, which shows global recoverable oil reserves standing at around 1,500 billion barrels, down around 52 billion barrels from its 2023 analysis.

The largest downward revisions are seen in Saudi Arabia, where development priorities have shifted from offshore capacity expansions to onshore infill drilling. The only country with any significant increase in 2024 is Argentina, with a gain of 4bn barrels thanks to the derisking of shale projects in the Vaca Muerta formation.

Rystad’s estimates of total recoverable oil resources have fallen by 700bn barrels since 2019 due to reduced exploration activities. Exploration has fallen as investors fear stranded assets due to the ongoing electrification of vehicles and the expected decline in both oil demand and crude prices.

“The world’s remaining oil reserves are insufficient to support oil demand if there is no transition to electric vehicles. Attempts to limit the supply of oil will have hardly any effect on limiting global warming. Instead, the only feasible way of keeping global temperatures rising less than 2.0 degrees Celsius is to ensure fast electrification of road transportation,” says Per Magnus Nysveen, head of Analysis at Rystad Energy.

Rystad Energy also reports proven oil reserves at 449bn barrels, which signifies remaining oil reserves if no new development projects were to be approved and all exploration activities were stopped. This is a significant upward revision since 2023, driven by increased onshore infill drilling in Saudi Arabia.