Record losses for Aramco boost the Kingdom’s economic crisis
The profits of the state oil company (Aramco) plunged by 25% in the first quarter of this year, affected by the repercussions of the Coronavirus and the collapse of oil prices globally, which strengthens the Kingdom’s economic crisis and the collapse of Vision 2030.
Aramco announced in its disclosure to the Stock Exchange today, Tuesday, that its net profit declined to 62.48 billion riyals (16.64 billion dollars), after Zakat and tax in the quarter ended March 31, compared to 83.29 billion riyals a year ago.
The profits recorded are much less than the expectations of local and regional investment funds, as the Egyptian financial group Hermes, Al-Rajhi Capital Saudi Arabia and Dubai-based Arqaam Capital estimated profits at about $17.8 billion on average.
Aramco said that the results reflect a drop in crude oil prices, as well as declining refining and chemical margins, and losses on the revaluation of stocks.
Crude oil prices fell 65% in the first quarter, before producers in OPEC and outside in what is known as the “OPEC +” alliance agreed to cut supplies at a record rate of 9.7 million barrels per day starting in May to help raise prices and curb excess supply.
Energy companies in the Kingdom pay a heavy price for the collapse of oil prices. The Saudi Basic Industries Corporation (SABIC), the giant of the petrochemical industry in the Kingdom, announced on May 4 this year that it incurred losses worth SR 950 million in the first quarter of 2020 compared to profits It reached $909 million in the same period of 2019.
The losses of (SABIC), which is the second largest company listed in the Saudi stock market after (Aramco), come for the second consecutive quarter, as it incurred about 720 million riyals in the last three months of last year.
Petro Rabigh, which operates in oil refining and petrochemical production, also disclosed on May 5, sharp losses during the first three months of this year, amounting to 1.79 billion riyals, compared to profits of 257 million riyals during the same period in 2019.
The Kingdom directed the National Oil Company (Aramco) to reduce its production of crude oil for June by an additional voluntary amount of one million barrels per day, above the reductions previously promised by the Kingdom under the (OPEC Plus) agreement.
This brings the total production cut that the Kingdom will implement to about 4.8 million barrels per day from the April production level, “an official at the Ministry of Energy said.
He explained that the June production of the Kingdom – after the targeted and voluntary reduction – would be 7.492 million barrels per day.
