Aramco reports $29.1bn net profit in Q2, up 6.59%

1 / 2
Short Url
Updated 06 August 2024
Follow

Aramco reports $29.1bn net profit in Q2, up 6.59%

  • For the first half of the year, the company’s net income reached $56.3 billion
  • Aramco expects to declare total dividends of $124.2 billion for 2024

RIYADH: Saudi oil giant Aramco reported a net profit of $29.1 billion for the second quarter of 2024, reflecting a 6.59 percent quarter-on-quarter increase, despite challenging market conditions. 

For the first half of the year, the company’s net income reached $56.3 billion. Operating cash flow amounted to $64.7 billion in the six months to the end of June, with $31.1 billion of that coming in the second quarter of 2024. 

During a press conference following the results, Amin Nasser, Aramco’s president and CEO, said: “We remain positive about the outlook for global oil demand. Despite concerns about an economic downturn, global oil demand has been resilient, and in the first half of this year, demand saw record growth.” 

The company reported SR828.74 billion in revenue for the first half of the year, registering a 0.9 percent increase from SR804.8 billion in the same period of 2023, driven by higher crude oil and refined product prices, as well as higher volumes of refined and chemical products sold. 

He added: “As you have seen from our results today (Aug. 6), Aramco has once again delivered market-leading performance with strong earnings and cash flow in the first half of the year. On the financial side, we continue to maintain one of the most robust balance sheets in our industry.” 

Aramco has declared a base dividend of $20.3 billion for the second quarter and a performance-linked dividend of $10.8 billion, which will be paid in the next three months. 

The company expects to declare total dividends of $124.2 billion for 2024, highlighting its strong financial position. 

In June, as part of the secondary public offering, Aramco acquired 137.6 million ordinary shares from the government for a cash payment of $1 billion. 

The company’s secondary public offering and $6 billion bond issuance attracted significant investor interest. The firm also advanced its gas expansion with over $25 billion in new contracts, aiming for a 60 percent increase in sales gas production by 2030. 

“We have also continued to create and deliver both value and growth, as demonstrated by the positive investor response to the Government’s secondary public offering of Aramco shares and our recent $6 billion bond issuance. Our drive to create value is supported by our distinctive long-term competitive advantages, our exceptional financial resilience through cycles, and our strong balance sheet,” he added. 

In response to Arab News’ question about refined and chemical products, Nasser said that Aramco is set to witness much more robust growth.

“In the first half, we saw significant growth, but we are expecting even more growth, especially in jet fuel in China. We are looking at almost 20 percent growth in jet fuel,” he added. 

Aramco’s CEO explained that jet fuel and kerosene production was 7.2 million barrels per day in 2023, with a projection to increase to 7.7 million bpd in 2024.

Nasser continued: “We are also seeing strong growth in gasoline and a lot of the feedstock going into petrochemicals. This growth is supported by our investments in China, where they are putting much feedstock into liquid-to-chemical processes.” 

The CEO said despite global supply and demand imbalances and geopolitical tensions the market is largely overlooking these issues, and he expects a healthy outlook for the rest of the year. 

Nasser added that total demand in China for the second half of the year is projected to be around 17.5 million bpd, up from 16.8 million bpd in the first half of 2023, driven by jet fuel and the liquid-to-chemical sector. 

The state-owned oil giant reported total revenues of $113.52 billion in the second quarter of the year, compared to $107.35 billion for the same period in 2023. 

For the three months to the end of June, free cash flow decreased compared to the same quarter in 2023. This decline was mainly due to lower operating cash flows from reduced earnings and unfavorable changes in working capital. 

However, this was partially offset by a reduction in cash payments for income, zakat, and other taxes. 

Regarding the downstream sector, Aramco’s Chief Financial Officer, Ziad Al-Murshed, explained that the negative earnings before interest and taxes results were mainly due to inventory revaluation, not actual losses. 

He added a reduction in refining margins, especially in Asia, though margins in the US are still healthy. While chemical margins have improved slightly, they remain weak. 

Al-Murshed said that Aramco’s focus on converting liquid molecules into chemicals remains strong, particularly in China due to its market size and expansion opportunities. 

Nasser also highlighted key strategic developments, noting that the first phase of Jafurah is scheduled for 2025, the second phase for 2027, and a full ramp-up to 2 billion cubic feet of sales gas by 2030. 

He said: “The importance, as you know, of Jafurah is not only the gas. What you need to consider also is the ethane that we are anticipating will be coming out of Jafurah. This is an important feedstock for the chemical industry. Jafurah alone, with this increment, will bring almost more than 40 percent of what we have today in ethane, which is crucial for our chemical growth in the Kingdom.” 

Nasser also noted that significant progress was made in key strategic areas during the second quarter, building on these strengths.

The state oil firm acquired a 10 percent stake in HORSE Powertrain Limited and a 40 percent interest in Gas & Oil Pakistan Ltd. It also partnered with Pasqal to install Saudi Arabia’s first quantum computer. 


Saudi crude output up 1.21% to hit 8.92m bpd: JODI 

Updated 8 sec ago
Follow

Saudi crude output up 1.21% to hit 8.92m bpd: JODI 

RIYADH: Saudi Arabia’s crude oil production rose to 8.92 million barrels per day in November, a 1.21 percent annual increase according to the latest release from the Joint Organizations Data Initiative. 

The report showed a 2.05 percent drop in crude exports, which fell to 6.21 million bpd, although this figure marks the highest level in eight months. 

Refinery crude exports surged 36 percent year on year to 1.14 million bpd in November but declined by 18.65 percent compared to October. 

Key refined products included diesel, motor gasoline, aviation gasoline, and fuel oil.

Diesel exports accounted for 38 percent of refined product shipments, while motor and aviation gasoline made up 24 percent, and fuel oil comprised 11 percent. 

Notably, motor and aviation shipments rose 63 percent annually to 272,000 bpd in November. Diesel exports also increased by 27 percent reaching 439,000 bpd. 

Saudi Arabia’s refinery output reached 2.35 million bpd, a 13 percent year-on-year increase, with diesel representing 40 percent of total refined products, followed by motor and aviation gasoline at 25 percent and fuel oil at 19 percent. 

Domestic demand for refinery products increased by 210,000 bpd year on year, reaching 2.56 million bpd. 

OPEC+ has decided to delay the start of oil output increases by three months until April, and extend the full unwinding of cuts by a year, now set to finish by the end of 2026. 

This decision was made in response to weak global demand and rising production from countries outside the group. OPEC+, which controls around half of the world’s oil production, had initially planned to begin unwinding cuts in October 2024, but delays were caused by global demand slowdowns and growing non-OPEC+ output. 

Direct crude usage 

Saudi Arabia’s direct crude oil burn fell by 119,000 bpd in November to 382,000 bpd, a 24 percent year-on-year decline and a 5.5 percent increase from October. 

The annual reduction can be attributed to the global shift toward cleaner energy sources, such as natural gas, renewables, and electricity, which are gradually replacing crude oil in sectors like power generation and shipping. 

Additionally, improved energy efficiency and stricter environmental regulations have led to further reductions in crude oil use. 

By 2030, the Saudi government plans to phase out the use of crude oil, fuel oil, and diesel in power generation, replacing them with natural gas and renewable energy sources. 

This transition is a key component of the Kingdom’s Vision 2030 initiative, aimed at diversifying its energy mix and reducing dependence on oil, both domestically and in global markets. 

As Saudi Arabia moves toward this objective, natural gas demand is anticipated to rise sharply, driving increased investments in the natural gas supply chain, including exploration and infrastructure development. 


Ogero resumes telecom expansion in Lebanon, boosting connectivity and major upgrades

Updated 18 min 27 sec ago
Follow

Ogero resumes telecom expansion in Lebanon, boosting connectivity and major upgrades

  • Ogero connected 221,000 households to fiber-optic Internet in 2024 and plans to add 406,000 new subscribers this year
  • It is is also upgrading from Wi-Fi 5, currently used at Beirut Rafic Hariri International Airport, to Wi-Fi 7

RIYADH: Lebanon’s state-owned telecom company Ogero is working to restore and expand the country’s connectivity after experiencing damages due to the Israeli conflict.

The clashes have significantly disrupted Lebanon’s telecom infrastructure, impeding connectivity and slowing the nation’s digital advancement.

Ogero’s Chairman and Director General Imad Kreidieh announced in a live broadcast that the company’s expansion plans will resume, supported by funding from multiple donors.

According to Kreidieh, Ogero connected 221,000 households to fiber-optic Internet in 2024 and plans to add 406,000 new subscribers to the network this year.

The company is also upgrading from Wi-Fi 5, currently used at Beirut Rafic Hariri International Airport, to Wi-Fi 7. The upgrade will provide speeds of up to 3,500 megabits per second with ultra-low latency of 2— 4 milliseconds. 

The network’s backhaul capacity is being upgraded from 20 gigabits per second to 40 Gbps to support enhanced connectivity, according to Kreidieh.

Ogero is also expanding its LTE infrastructure, increasing the number of stations from 97 to 219 by the end of 2025 and 390 by 2026, which translates to better and wider coverage nationwide. 

The LTE-Advanced capacity will be quadrupled from 10 Gbps to 40 Gbps to enhance performance and service quality.

The top official also said that Ogero will build 215 new stations in the southern and Baalbek regions, which were heavily damaged by Israeli strikes, over the next 24 months, allowing users to regain connectivity.

In a move toward sustainability, Ogero is also implementing solar energy solutions for 358 sites, with a 4-megawatt production capacity and 463 kiloampere-hours storage capacity. The $9.6 million project is expected to generate $8.5 million in annual savings, according to Kreidieh.

Ogero serves as the core of the Ministry of Telecommunications, providing essential infrastructure for all telecom networks, including mobile operators, data service providers, and Internet service providers.


Up to 40 Canadian firms eyeing investment in Saudi Arabia’s healthcare sector

Updated 22 January 2025
Follow

Up to 40 Canadian firms eyeing investment in Saudi Arabia’s healthcare sector

RIYADH: Up to 40 Canadian firms are eying investment in Saudi Arabia’s healthcare sector amid efforts to strengthen economic ties between the countries.

The interest was highlighted at a healthcare event organized by the Federation of Saudi Chambers at its headquarters in Riyadh, which showcased various investment opportunities within the sector, the Saudi Press Agency reported.

This aligns with Saudi Arabia’s objective to boost private sector participation in healthcare to 25 percent by 2030, reflecting the rapid growth and expansion of the industry, along with attractive investment incentives. It also underscores the Kingdom’s broader efforts to strengthen ties with Canada, highlighted by the restoration of diplomatic relations in May 2023 after a five-year hiatus.

During the gathering, Chairman of the Saudi-Canadian Business Council Mohammed bin Nasser Al-Duleim highlighted the body’s pivotal role in boosting trade relations and fostering investment between the Kingdom and the North American country.

Al-Duleim also provided an overview of Vision 2030 initiatives and talked up the incentives and support offered by Saudi Arabia to foreign investors.

The Ambassador of Canada to the Kingdom Jean-Philippe Linteau commended the efforts to strengthen economic ties between countries. 

He emphasized the joint business council’s contributions and highlighted the strong interest of Canadian firms in Saudi Arabia’s healthcare sector.

In December, economic cooperation was the focus of a high-level meeting between a senior Saudi official and the Canadian ambassador, reflecting the ongoing progress in relations between the two nations.

The Kingdom’s Minister of Economy and Planning Faisal Al-Ibrahim held talks with Linteau at his department’s headquarters in Riyadh, SPA said at the time. 

Since normalizing relations, Canada is keen to build a “great relationship” with the Kingdom, Linteau said during an interview with Arab News in February. 

His commets came a month after Saudi Arabia and Canada agreed to re-exchange trade delegations, aiming to improve economic relations and increase trade and investment volumes. 

Hassan Al-Huwaizi, president of the Saudi Chambers of Commerce, emphasized at the time that establishing a joint business council would provide a platform for business leaders to promote activities and engage in partnerships, facilitating continuous interaction and information exchange about market opportunities.

In 2022, Saudi exports to Canada stood at $2.5 billion, with imports valued at $959 million, according to online data visualization and distribution platform Observatory of Economic Complexity.


Saudi Arabia, Palestine to boost trade with formation of new business council

Updated 22 January 2025
Follow

Saudi Arabia, Palestine to boost trade with formation of new business council

  • Formation of the Saudi-Palestinian Business Council represents a significant step in strengthening economic ties
  • It comes two after a ceasefire deal came into effect between Israel and Hamas

RIYADH: Saudi Arabia and Palestine have agreed to form a business council to boost bilateral trade and promote investments between both nations. 

The agreement to form the first Saudi-Palestinian Business Council was made during a meeting between Hassan Al-Huwaizi, chairman of the Federation of Saudi Chambers, and Mazen Ghanem, Palestinian ambassador to the Kingdom, in Riyadh, the Saudi Press Agency reported. 

The formation of the Saudi-Palestinian Business Council represents a significant step in strengthening economic ties, particularly as trade between the two countries continues to grow. 

In the third quarter of 2024, the Kingdom’s overall exports to Palestine stood at SR118.3 million ($31.53 million), representing a 35 percent rise compared to the previous three months, according to data from the General Authority for Statistics. 

Saudi Arabia also imported Palestinian goods worth SR4 million in the third quarter of 2024.

During the meeting, Al-Huwaizi stressed the need to empower Palestinian business owners to invest in Saudi Arabia and market products from the West Asian nation in the Kingdom’s market. 

He also reaffirmed the federation’s support for holding exhibitions and conferences to introduce and market Palestinian products in the Kingdom. 

The new agreement comes just two after a ceasefire deal came into effect between Israel and Hamas, allowing some displaced residents to return to their homes. 

To stabilize the economy, the Palestine Monetary Authority issued new instructions to banks to ease the burden of accumulated installments on borrowers in Gaza and the West Bank during the war period. 

The authority also instructed banks to stop collecting installments in Gaza until the end of June, with the possibility of scheduling and postponing it further. 

Other instructions from the monetary authority include reducing interest rates on new loans and stopping the collection of commissions and late fees. 

Earlier this month, Palestinian President Mahmoud Abbas met with Nayef bin Bandar Al-Sudairi, the Saudi ambassador to Palestine, and honored him with the Star of Al-Quds medal, a top-rated decoration provided by the state. 

During the meeting, Abbas extended his greetings to King Salman and Crown Prince Mohammed bin Salman and thanked Saudi Arabia for the support offered to the Palestinian people and their cause. 

Abbas also praised Al-Sudairi’s efforts to strengthen the friendly relations between Palestine and the Kingdom.


Saudi Arabia, Gulf region ‘well positioned’ to take lead on global energy transition, says S&P executive

Updated 22 January 2025
Follow

Saudi Arabia, Gulf region ‘well positioned’ to take lead on global energy transition, says S&P executive

  • Under President Donald Trump’s renewed leadership, energy policy in the US is expected to shift toward an emphasis on increasing crude and gas production

DAVOS: The Middle East, particularly Saudi Arabia, is poised to play a pivotal role in the global energy transition, according to Mark Eramo, co-president of S&P Global Commodity Insights. 

Speaking to Arab News at the annual meeting of the World Economic Forum in Davos, Eramo highlighted the region’s growing renewable energy capabilities and its potential to balance traditional energy demands with advancing sustainability goals.

“The renewable energy capabilities in the Middle East are primed to be part of the energy transition and will also continue to support what we would now call traditional energy as it’s needed,” Eramo said.

He emphasized the ongoing importance of energy affordability and security, noting their priority for governments worldwide. 

Eramo said Saudi Arabia, with its growing investments in the renewable energy sector, as well as ammonia production for hydrogen, is poised to emerge as a worldwide leader, adding: “The Kingdom is really positioned well to be an energy transition provider and take a global leadership role in that.”

With this in mind, Eramo highlighted S&P’s significant footprint in the Middle East and said the organization was in the process of expanding its presence in the region, something he said he was “excited about.”

He continued: “I manage S&P Global Commodity Insights and watch closely what is happening in Saudi Arabia and the region is near and dear to the work that we do. It’s a fundamental part of what we’re doing, whether it be downstream chemicals or just fundamental oil and gas and renewable energy. So, our plan is to increase our footprint in the region and be there.” 

Eramo also reflected on the global energy outlook, touching on the implications of potential US policy shifts. 

Under President Donald Trump’s renewed leadership, energy policy in the US is expected to shift toward an emphasis on increasing crude and gas production and expanding export terminal capacity, something which was paused under the administration of Joe Biden.

Citing that Trump this week declared an “energy emergency” in the US, Eramo said that the new administration’s focus on lower energy prices would aim to curb inflation and prioritize security.

Globally, he also noted the varied and pragmatic approach to the pace of energy transition, shaped by differing regional priorities. 

“There are challenges in Europe, Asia Pacific, and South Asia. Each country, whether it’s China or India, will respond differently,” he said. 

“It’s not about whether energy transition is over but understanding that it’s been going on for decades, driven by carbon emission reductions and fuel efficiency advancements,” he added.

Eramo acknowledged the historical resilience of energy players in navigating geopolitical uncertainties, especially in the Middle East in the past two years. 

“I think there’s a long history of geopolitical turmoil in different parts of the world, and I think the major players in energy supply, including in the Middle East, have always found a way to work with their partners — whether in Europe, APAC (Asia-Pacific) or in the Americas — to navigate those waters and respond accordingly,” he said.