Saudi Aramco maintains $31bn dividend despite lower earnings

Dubai — Saudi Arabian state-owned oil giant Aramco expects to pay $31bn in dividends to the Saudi government and its shareholders despite reporting lower earnings for the first quarter on Tuesday, hit by lower oil prices and volumes sold.

The Saudi government, which directly holds about 82.2% of Aramco, relies heavily on the company’s payouts, which also include royalties and taxes.

The kingdom, the world’s biggest oil exporter, is spending billions of dollars to diversify its economy away from crude.

Aramco reported a 14% decline in first-quarter net income to $27.3bn in the three months to March 31, in line with analyst estimates and down from $31.9bn a year earlier, according to a company earnings statement.

The company declared base dividend payouts for the first quarter totalling $20.3bn and a performance-linked dividend distribution of $10.8bn to be paid in the second quarter.

It said it expects total dividends of $124.3bn to be declared in 2024, of those $43.1bn in performance-linked dividends.

Opec+ has implemented a series of output cuts since late 2022 amid rising output from the US and other non-member producers, and worries over demand as major economies grapple with high interest rates.

Brent crude has averaged about $83.50 so far in 2024, while Saudi Arabia needs oil at $96.2 to balance its 2024 budget, the IMF forecasts. With a projected budget deficit of 79-billion riyals ($21.07bn) this year, the kingdom could delay parts of its multiple mega projects.

Finance minister Mohammed Al-Jadaan said recently that the kingdom’s Vision 2030 plan to transform its economy will be adjusted as needed, with some projects being scaled back or extended and others accelerated amid a challenging environment.

The kingdom could also raise up to 138-billion riyals ($36.80bn ) in financing in 2024, from $23bn initially estimated at the beginning of year.

The Saudi government in late January ordered Aramco to scrap its expansion plan to boost production capacity to 13-million barrels a day (bpd), returning to the previous 12-million barrels per day target.

Two projects that were part of the expansion plan — Safaniyah and Manifa — are now on hold, while three others are ongoing.

On Tuesdaym Aramco said Marjan and Berri were expected to come onstream in 2025 adding 300-million barrels per day and 250-million barrels per day, respectively, while Zuluf was on track to add 600-million barrels per day by 2026.

Maximum production capacity will be optimised to maintain it within the 12-million barrels per day target despite ongoing projects.

Saudi Arabia is poised to sell more shares of energy giant Aramco, three people familiar with the matter told Reuters in February, and has lined up Citigroup, Goldman Sachs and HSBC for the sale, according to one of the sources.

Reuters