Saudi Aramco has reported its highest annual revenue since an IPO in 2019, when the world’s largest oil exporter benefited from reviving energy demand.

Net income will more than double to $110 billion by 2021, the company said Sunday, and it maintained its full-year cash dividend — one of the largest in the world — at $75 billion. Analysts had forecast net profit of $109.7 billion according to an average prepared by the company.

The state-backed group, which reported profits of $49 billion a year earlier, said the 124 percent increase was the result of “higher crude oil prices, stronger refining and chemicals margins and the consolidation of SABIC’s annual results.” “. The company acquired a 70 percent stake in Saudi petrochemical company Sabic in 2020.

The dividend included $18.8 billion for the fourth quarter, payable before the end of March. The payment is a vital source of revenue for the Saudi government, which owns 98 percent of Saudi Aramco’s shares after a small portion of the company’s shares were listed in December 2019.

The company also said it would return $4 billion in bonus shares to existing shareholders.

Gearing, which the company defines as a measure of the extent to which operations are financed with debt, fell from 23 percent in December 2020 to 14.2 percent as the company committed some of its $107.5 billion free cash flow. That compares to minus 4.9 percent in the first quarter of 2020, before the fall in prices from the coronavirus pandemic forced the company to borrow heavily to maintain its dividend last year.

Saudi Aramco and international rivals including Chevron, ExxonMobil and BP have benefited from the global economic recovery and supply constraints, pushing oil prices above $100 a barrel for the first time in more than seven years.

Prices have been pushed even further by fears that a boycott of Russian oil after the invasion of Ukraine could take up to 2.5 million barrels of crude oil and petroleum products per day off the market, and the reluctance of Saudi Arabia and its allies in the Opec+ group to ramp up production to compensate.

The cartel has adhered to an agreement reached last year not to increase production by more than 400,000 b/d each month, even though some members have fallen short of their quotas. The US and other major consumers have repeatedly called on countries with significant spare capacity, such as Saudi Arabia and the United Arab Emirates, to pump more.

Saudi Aramco said average crude oil production was 9.2 million b/d in 2021 as it gradually replaced production cuts at the start of the pandemic. It is in the process of increasing its maximum production capacity from 12 million to 13 million b/d.

The company added that it was investing in carbon capture and storage, renewable energies and low-carbon hydrogen production after it pledged in October to achieve net zero operational emissions, known in the industry as scope 1 and scope 2, from its wholly owned property by 2050.

The decision was announced following a move by the Saudi government to cut carbon emissions by 2060.

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This post Saudi Aramco’s net revenues double to $110 billion on rising oil demand was original published at “https://www.ft.com/content/df47949a-380a-43ca-9286-dfa89ed9016e”

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