In 2023, Saudi Aramco, a major state-owned oil company in Saudi Arabia, experienced a notable decrease in net profit, which declined by 24.7% to reach $121.3 billion as reported by Reuters. This was a significant reduction from the previous year's $161.1 billion.
The primary reasons for this decline were the lower oil prices and reduced oil volumes. Despite this setback, Aramco made a strategic decision to increase its total dividends for the year to $97.8 billion, up by 30% from the previous year.
This move underscores the critical role of oil revenues in the Saudi economy, as they accounted for 62% of the country's total state revenues in the past year.
The financial performance of Saudi Aramco is of paramount importance to the Saudi government, which holds a substantial stake of about 82.2% in the company. Aramco's considerable dividends, along with the royalties and taxes it contributes, are a significant source of revenue for the government.
This reliance on oil revenue is especially pivotal as Saudi Arabia, the world's top oil exporter, is in the midst of a major economic transition.
For many years, the Saudi economy has been heavily dependent on oil, but there is now a strong push towards diversifying the economy and finding alternative sources of income, involving extensive investments.
Aramco's Chief Executive, Amin Nasser, made a statement about the company's financial resilience. He emphasized that despite the ambitious growth initiatives and substantial dividend distributions, Aramco's balance sheet remains robust.
Nasser also provided a forecast for global oil demand, predicting an increase to 104 million barrels per day in 2024, up from the 2023 average of 102.4 million barrels.
Saudi Arabia's broader economic diversification strategy is embodied in Vision 2030, an ambitious plan spearheaded by the sovereign Public Investment Fund (PIF).
The PIF, which now owns 16% of Aramco following a recent transfer of an 8% stake from the government to PIF-owned companies, plays a key role in this strategy. This transfer is part of a larger effort to reduce the government's direct dependence on oil revenue and to promote economic diversification across various sectors.
10.03.2024
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