Aramco profit falls 21% on lower oil
DUBAI: Saudi Aramco, the spearhead of the kingdom’s oil price war, posted a 21% drop in fullyear profit and cut planned 2020 capital expenditure. The oil giant cited lower crude oil prices and production for the decline in profit. It’s the first time Aramco reported results as a listed company since its record $29 billion share sale in December.
An oil-price war led by Saudi Arabia, which holds all but 1.5% of Aramco’s shares, and Russia threatens more pain for the company as producing nations prepare to boost supplies at discounted prices to markets already reeling f rom weak demand. Crude oil has lost half of its value since the beginning of the year.
Prices fell last year even as Saudi Arabia trimmed output as part of the joint effort between OPEC and producers like Russia to rein in production. Drone and missi l e a t t a c ks o n t wo o f Aramco’s biggest oil facilities in September temporarily slashed production by more than half, but didn’t cause a big surge in prices.
Brent crude averaged $64.12 a barrel in 2019 compared with $71.67 the previous year. Saudi production slipped to an average of 9.83 million barrels a day from 10.65 million in 2018, according to data compiled by Bloomberg. The company had restored output to pre-attack levels by early October.
Additionally, the company is slashing planned spending this year in the first sign that plunging demand and the oil-price war are hitting home. As per the plan, capital expenditure will be between $25 billion and $30 billion in 2020 and spending plans for next year and beyond are being reviewed, Aramco said. The oil giant is lowering that range from the planned $35 billion to $40 billion announced in its IPO prospectus, and compares with $32.8 billion in 2019.