Saudi Aramco’s profits almost triple thanks to oil price rise

World’s largest oil firm declares $18.8bn dividend after receiving net income of $30.4bn in Q3

Saudi Aramco enjoyed a near tripling of profits in the third quarter, bolstered by the continued imbalance between fuel supply and post-Covid demand. 

The world’s largest oil firm reported net income for the three months to the end of September of $30.4bn (£22.2bn), $1.3bn more than prior analysis had suggested and $18.6bn more than the $11.8bn generated in the third quarter of 2020. 

Having only just undertaken the largest initial public offering in history at the end of 2019, the  state-backed company struggled with the onset of the coronavirus crisis and the subsequent collapse in oil prices. It preferred to take on more debt in order to maintain the substantial dividend payments by which it had attracted investors.   

In order to support the commodity during this period, as a member of the Organisation of the Petroleum Exporting Countries (OPEC), Saudi Arabia implemented record output limits in conjunction with allies such as Russia. 

Despite the end of most coronavirus restrictions around the world, at 9.5 million barrels per day (bpd) Aramco’s crude production for the third quarter of 2021 averaged only 300,000 bpd more than in the third quarter of 2020. 

Hailing the results, Aramco President and CEO Amin Nasser stated: “Our exceptional third quarter performance was a result of increased economic activity in key markets and a rebound in energy demand.

“Some headwinds still exist for the global economy, partly due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future.”

Having seen its free cash flow rise by $16.3bn in the space of a year to $28.7bn in the third quarter, the company declared a dividend of $18.8bn to be paid in the fourth quarter. 

Energy transition

In the run-up to COP26, the 26th annual UN conference on climate change in Glasgow, Scotland, Aramco outlined its ambition to achieve net zero carbon emissions by 2050. 

The feasibility of making good on this ambition was brought into question by the company’s plan to boost oil production to 13 million bpd by 2037, which Nasser was said to have mentioned during the Energy Intelligence Forum in October. 

Speaking to CNBC, Aramco chairman Yasir Al-Rumayyan recently maintained: “The reality is that the energy transition will be long and complex, and therefore oil and gas will continue to play a key role. Recent energy disruptions around the world are evidence of the need for a stable and inclusive energy transition. We need a transition that provides a reliable, affordable and low-cost supply of energy that leaves no one behind.”

Saudi Aramco closed down by 0.4% on Monday at 37.75 saudi riyals, 8% higher than its 2021 starting level.

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