Aramco is working on increasing gas production by more than 60% by the year 2030
Saudi Arabian Oil Company, Saudi Aramco, announced last Sunday its full financial results for the year 2023.
The company recorded a net income of 454.8 billion Saudi Riyals ($121.3 billion), marking the second highest net income in the company’s history. This performance, bolstered by Saudi Aramco’s exceptional operational resilience, reliability, and low base of production costs, reflects the company's continued commitment to delivering value to its shareholders.
In commenting on these results, Engineer Amin H. Nasser, President and CEO of Saudi Aramco, said, "We announced strong profits, solid cash flows and high profitability levels in 2023, achieving the second highest net income ever despite the challenges faced by the global economy. We also delivered a 30% year-on-year increase in total dividend distributions to our shareholders for 2023."
He added that capital expenditure rose in line with guidance to drive additional value from its operations, thereby enhancing the company's capability to maintain its leadership position as we move toward a future in which oil and gas are expected to remain central components of the global energy mix for many more decades, alongside new energy solutions.
The government's directive to maintain Aramco's sustainable maximum production capacity at 12 million barrels per day offers more flexibility and the chance to focus on increasing gas production and growing its liquids-to-chemicals business. Simultaneously, progress continues in several strategic crude oil enhancement projects that will further solidify our reliability and operational flexibility, enabling us to seize market opportunities. Concurrently, the company has announced a series of investment projects highlighting its capability to exploit new market opportunities and bolster strategic goals, including its first global investment in liquefied natural gas and the expansion of its international retail operations, as well as major overseas refining and chemicals projects and its emerging portfolio in new energy sources.
In financial highlights, Saudi Aramco’s net income reached 454.8 billion Riyals ($121.3 billion) in 2023, down from 604.0 billion Riyals ($161.1 billion) in 2022, which represents the second highest net income ever for Saudi Aramco. The year-on-year decline is attributed to lower crude oil prices and volumes sold, along with decreased refining and chemicals profit margins. This was partially offset by lower production royalties, as well as diminished income taxes and Zakat.
Free cash flow stood at 379.5 billion Riyals ($101.2 billion) in 2023, compared to 557.0 billion Riyals ($148.5 billion) in 2022. Aramco's financial position remains robust, with a debt ratio of -6.3% at the end of 2023, compared to -7.9% at the end of 2022.
Total dividends of 366.7 billion Riyals ($97.8 billion) were paid out in 2023, marking a 30% increase over 2022. Saudi Aramco announced base dividend distributions of 76.1 billion Riyals ($20.3 billion) for the fourth quarter of 2023, to be paid in the first quarter of 2024. Additionally, the Board has approved a third installment of performance-related dividend payments amounting to 40.41 billion Riyals ($10.78 billion).
In August 2023, the company announced plans to calculate its first performance-related dividends based on the full-year aggregate results for 2022 and 2023, to be distributed over six quarters starting from the third quarter of 2023.
Total performance-related dividends expected to be paid out in 2024 approximately reach 161.7 billion Riyals ($43.1 billion), including 40.41 billion Riyals ($10.8 billion) in the first quarter, subject to the previously announced mechanism and Board approval.
Capital investments in 2023 amounted to 186.3 billion Riyals ($49.7 billion), including 158.3 billion Riyals ($42.2 billion) in principal capital expenditure – a 28% increase from total capital investments of 145.5 billion Riyals / $38.8 billion in 2022, including 141.2 billion Riyals / $37.6 billion in principal capital expenditure.
Saudi Aramco expects its capital investments for 2024 to be between 180 billion Riyals ($48 billion) and 218 billion Riyals ($58 billion), with growth expected until the middle of this decade. The Energy Ministry’s guidance to maintain a sustainable maximum production capacity of 12 million barrels per day will result, primarily through deferral of uninitiated projects and reductions in associated drilling activities, in lowering capital investment by approximately 150 billion Saudi Riyals ($40 billion American) between 2024 and 2028.
In operational highlights, Saudi Aramco’s average hydrocarbon production reached 12.8 million barrels of oil equivalent per day in 2023, including a total of 10.7 million barrels per day of liquids. The company continued its strong record of supply reliability by delivering crude oil and other products at a reliability rate of 99.8% in 2023.
The company is making progress on projects aimed at boosting crude oil production at the Marjan, Berri, Dammam, and Zuluf fields, aiming to sustain the company’s reliability, operational flexibility, and capability to harness value from the growing global demand, while maintaining its sustainable maximum production capacity of 12.0 million barrels per day.
The company’s gas projects are advancing with a goal of increasing gas production by more than 60% by 2030 compared to 2021 levels. Projects include the Hawiyah Unayzah Gas Reservoir Storage project, where injection activities commenced to eventually reintroduce up to two billion standard cubic feet per day into the main gas network, and the completion of the Hawiyah Gas Plant expansion, increasing raw gas processing capacity by an additional 800 million standard cubic feet per day, including approximately 750 million standard cubic feet per day of sales gas processing capacity. Additionally, production of the first unconventional tight gas from the South Ghawar operating area has commenced.
The company announced its first global investment in liquefied natural gas after signing final agreements to acquire a minority strategic stake in Mid Ocean Energy, a transaction subject to closing conditions, including regulatory approvals. Aligned with Saudi Aramco's strategic goal of developing its liquids-to-chemicals strategy, the company acquired a 10% stake in Rongsheng Petrochemical Co. Ltd. Under a long-term sales agreement, Saudi Aramco is entitled to supply 480,000 barrels per day of crude oil to Rongsheng Petrochemical’s Zhejiang Petrochemical Co. Ltd., which operates one of China's largest integrated refining and chemical complexes. Complementing the premium branded lubricant products offered by Saudi Aramco, the company completed its acquisition of Valvoline Global Products. The acquisition is expected to improve the global base oil production capabilities of Saudi Aramco, expanding research and development activities and partnerships with original equipment manufacturers.
Saudi Aramco and TotalEnergies awarded engineering, procurement, and construction contracts for the AMIRAL complex worth 41.3 billion Saudi Riyals ($11.0 billion American), a future expansion of the world-class petrochemical facility at the SATORP refinery in Jubail. It will include one of the region's largest mix-feed steam crackers, with an ethylene production capacity of 1.65 million tons per annum, as well as other specialty gases. The project is set to further develop Aramco’s strategy for the conversion of liquids to chemicals, with commercial operations expected to start in 2027.
Supporting its expansion into the global retail sector, Saudi Aramco completed the acquisition of a 100% stake in the Chilean retail company, Essmax Distribucion (SBE) (Essmax), a leading player in the retail fuel and lubricant trade in Chile from the Southern Cross Group. This represents the company's first investment in retail and marketing in South America. Saudi Aramco also signed final agreements to acquire a 40% stake in Pakistan’s Oil & Gas Co. Ltd. ("POGC"), a company operating in the fuel and lubricant retail and convenience store business in Pakistan, subject to customary closing conditions, including regulatory approvals.
In a move to reinforce their role in the development of renewable energy sources and in line with the goal to leverage solar energy resources within the Kingdom, Saudi Aramco signed a partnership agreement with the Public Investment Fund and ACWA Power to develop the Shaibah 1 and 2 photovoltaic solar power projects in the Kingdom, with a combined expected capacity of 2.66 gigawatts, anticipated to commence commercial operations by 2025.
As part of its institutional development activities to enhance its supply chain ecosystem, Saudi Aramco also signed a shareholders' agreement with Baoshan Iron & Steel Co. Ltd. (Baosteel) and the Public Investment Fund to establish a global steel plate manufacturing complex in the Kingdom. Additionally, a shareholders' agreement with global logistics services firm "DHL" was signed to establish a new procurement and logistics services center.
Aramco sees the demand for oil, gas, and chemicals remaining robust.
In commenting on these results, Engineer Amin H. Nasser, President and CEO of Saudi Aramco, said, "We announced strong profits, solid cash flows and high profitability levels in 2023, achieving the second highest net income ever despite the challenges faced by the global economy. We also delivered a 30% year-on-year increase in total dividend distributions to our shareholders for 2023."
He added that capital expenditure rose in line with guidance to drive additional value from its operations, thereby enhancing the company's capability to maintain its leadership position as we move toward a future in which oil and gas are expected to remain central components of the global energy mix for many more decades, alongside new energy solutions.
The government's directive to maintain Aramco's sustainable maximum production capacity at 12 million barrels per day offers more flexibility and the chance to focus on increasing gas production and growing its liquids-to-chemicals business. Simultaneously, progress continues in several strategic crude oil enhancement projects that will further solidify our reliability and operational flexibility, enabling us to seize market opportunities. Concurrently, the company has announced a series of investment projects highlighting its capability to exploit new market opportunities and bolster strategic goals, including its first global investment in liquefied natural gas and the expansion of its international retail operations, as well as major overseas refining and chemicals projects and its emerging portfolio in new energy sources.
In financial highlights, Saudi Aramco’s net income reached 454.8 billion Riyals ($121.3 billion) in 2023, down from 604.0 billion Riyals ($161.1 billion) in 2022, which represents the second highest net income ever for Saudi Aramco. The year-on-year decline is attributed to lower crude oil prices and volumes sold, along with decreased refining and chemicals profit margins. This was partially offset by lower production royalties, as well as diminished income taxes and Zakat.
Free cash flow stood at 379.5 billion Riyals ($101.2 billion) in 2023, compared to 557.0 billion Riyals ($148.5 billion) in 2022. Aramco's financial position remains robust, with a debt ratio of -6.3% at the end of 2023, compared to -7.9% at the end of 2022.
Total dividends of 366.7 billion Riyals ($97.8 billion) were paid out in 2023, marking a 30% increase over 2022. Saudi Aramco announced base dividend distributions of 76.1 billion Riyals ($20.3 billion) for the fourth quarter of 2023, to be paid in the first quarter of 2024. Additionally, the Board has approved a third installment of performance-related dividend payments amounting to 40.41 billion Riyals ($10.78 billion).
In August 2023, the company announced plans to calculate its first performance-related dividends based on the full-year aggregate results for 2022 and 2023, to be distributed over six quarters starting from the third quarter of 2023.
Total performance-related dividends expected to be paid out in 2024 approximately reach 161.7 billion Riyals ($43.1 billion), including 40.41 billion Riyals ($10.8 billion) in the first quarter, subject to the previously announced mechanism and Board approval.
Capital investments in 2023 amounted to 186.3 billion Riyals ($49.7 billion), including 158.3 billion Riyals ($42.2 billion) in principal capital expenditure – a 28% increase from total capital investments of 145.5 billion Riyals / $38.8 billion in 2022, including 141.2 billion Riyals / $37.6 billion in principal capital expenditure.
Saudi Aramco expects its capital investments for 2024 to be between 180 billion Riyals ($48 billion) and 218 billion Riyals ($58 billion), with growth expected until the middle of this decade. The Energy Ministry’s guidance to maintain a sustainable maximum production capacity of 12 million barrels per day will result, primarily through deferral of uninitiated projects and reductions in associated drilling activities, in lowering capital investment by approximately 150 billion Saudi Riyals ($40 billion American) between 2024 and 2028.
In operational highlights, Saudi Aramco’s average hydrocarbon production reached 12.8 million barrels of oil equivalent per day in 2023, including a total of 10.7 million barrels per day of liquids. The company continued its strong record of supply reliability by delivering crude oil and other products at a reliability rate of 99.8% in 2023.
The company is making progress on projects aimed at boosting crude oil production at the Marjan, Berri, Dammam, and Zuluf fields, aiming to sustain the company’s reliability, operational flexibility, and capability to harness value from the growing global demand, while maintaining its sustainable maximum production capacity of 12.0 million barrels per day.
The company’s gas projects are advancing with a goal of increasing gas production by more than 60% by 2030 compared to 2021 levels. Projects include the Hawiyah Unayzah Gas Reservoir Storage project, where injection activities commenced to eventually reintroduce up to two billion standard cubic feet per day into the main gas network, and the completion of the Hawiyah Gas Plant expansion, increasing raw gas processing capacity by an additional 800 million standard cubic feet per day, including approximately 750 million standard cubic feet per day of sales gas processing capacity. Additionally, production of the first unconventional tight gas from the South Ghawar operating area has commenced.
The company announced its first global investment in liquefied natural gas after signing final agreements to acquire a minority strategic stake in Mid Ocean Energy, a transaction subject to closing conditions, including regulatory approvals. Aligned with Saudi Aramco's strategic goal of developing its liquids-to-chemicals strategy, the company acquired a 10% stake in Rongsheng Petrochemical Co. Ltd. Under a long-term sales agreement, Saudi Aramco is entitled to supply 480,000 barrels per day of crude oil to Rongsheng Petrochemical’s Zhejiang Petrochemical Co. Ltd., which operates one of China's largest integrated refining and chemical complexes. Complementing the premium branded lubricant products offered by Saudi Aramco, the company completed its acquisition of Valvoline Global Products. The acquisition is expected to improve the global base oil production capabilities of Saudi Aramco, expanding research and development activities and partnerships with original equipment manufacturers.
Saudi Aramco and TotalEnergies awarded engineering, procurement, and construction contracts for the AMIRAL complex worth 41.3 billion Saudi Riyals ($11.0 billion American), a future expansion of the world-class petrochemical facility at the SATORP refinery in Jubail. It will include one of the region's largest mix-feed steam crackers, with an ethylene production capacity of 1.65 million tons per annum, as well as other specialty gases. The project is set to further develop Aramco’s strategy for the conversion of liquids to chemicals, with commercial operations expected to start in 2027.
Supporting its expansion into the global retail sector, Saudi Aramco completed the acquisition of a 100% stake in the Chilean retail company, Essmax Distribucion (SBE) (Essmax), a leading player in the retail fuel and lubricant trade in Chile from the Southern Cross Group. This represents the company's first investment in retail and marketing in South America. Saudi Aramco also signed final agreements to acquire a 40% stake in Pakistan’s Oil & Gas Co. Ltd. ("POGC"), a company operating in the fuel and lubricant retail and convenience store business in Pakistan, subject to customary closing conditions, including regulatory approvals.
In a move to reinforce their role in the development of renewable energy sources and in line with the goal to leverage solar energy resources within the Kingdom, Saudi Aramco signed a partnership agreement with the Public Investment Fund and ACWA Power to develop the Shaibah 1 and 2 photovoltaic solar power projects in the Kingdom, with a combined expected capacity of 2.66 gigawatts, anticipated to commence commercial operations by 2025.
As part of its institutional development activities to enhance its supply chain ecosystem, Saudi Aramco also signed a shareholders' agreement with Baoshan Iron & Steel Co. Ltd. (Baosteel) and the Public Investment Fund to establish a global steel plate manufacturing complex in the Kingdom. Additionally, a shareholders' agreement with global logistics services firm "DHL" was signed to establish a new procurement and logistics services center.
Aramco sees the demand for oil, gas, and chemicals remaining robust.
