In 2023, despite facing a 24.7% drop in net profit to $121.3 billion due to lower oil prices and volumes, Saudi Arabia’s state-owned oil giant Aramco announced an increase in its dividend, reflecting the nation’s ongoing dependence on oil revenues amidst efforts to diversify its economy.
The profit, a decrease from $161.1 billion in 2022, remains Aramco‘s second highest, with the company also reporting a 30% increase in total dividends to $97.8 billion for the year.
Oil revenue constituted 62% of the state’s total revenues.
The Saudi government, owning approximately 82.2% of Aramco, benefits significantly from the company’s dividends, royalties, and taxes.
Aramco plays a critical role in funding the kingdom’s ambitious economic diversification plans, including the Vision 2030 agenda led by the sovereign Public Investment Fund, which holds 16% of Aramco’s shares.
The company’s financial resilience was highlighted by CEO Amin Nasser, who also projected an increase in global oil demand.
Aramco announced a base dividend of $20.3 billion for the fourth quarter and anticipates $43.1 billion in performance-linked dividends for the upcoming year.
Both dividends saw increases from the previous year, with capital investments reaching $49.7 billion in 2023 and expected to grow further.
The company adjusted its expansion plans following a government directive, scaling back its production capacity target and thereby reducing capital investment forecasts by approximately $40 billion through 2028.
Free cash flow decreased in 2023, and Aramco outlined its investment strategy for the next several years, emphasizing the importance of gas and “new energies” alongside traditional oil and downstream investments.
The approach aims at bolstering oil exports and enhancing liquids production from gas extraction.
Despite the financial adjustments and the revised expansion strategy, Aramco’s shares experienced a modest increase, reflecting investor confidence.
The possibility of the Saudi government selling additional Aramco shares remains a topic of speculation, with decisions on such matters reserved for state authorities.