Saudi Aramco Q1 net income falls amid weaker refining, chemicals margins

SINGAPORE (ICIS)–Saudi Aramco’s net income fell by 14.4% year on year to Saudi riyal (SR) 102.3 billion in the first quarter amid lower crude oil volumes and weakening downstream margins, the energy giant said on Tuesday.

in SR billions	Q1 2024	Q1 2023	% Change
Sales	402.04	417.46	-3.7
Operational Profit	202.05	222.18	-9.1
Net profit	102.27	119.54	-14.4

Early this year, Saudi Arabia’s government ordered Aramco to halt its oil expansion plan and to target a maximum sustained production capacity of 12m barrels/day, 1m barrels/day below the target announced in 2020.

In the first quarter, Aramco’s downstream income before interest, income taxes and zakat (annual Islamic tax) slumped by 64% year on year to SR4.62 billion.

The drop in downstream earnings reflects weakening refining and chemicals margins, partially offset by inventory valuation movement, it said.

The drop in group earnings was partially offset by lower production royalties, an increase in crude oil prices compared to the same period last year and lower income taxes and zakat.

Despite having a capacity of 12 million barrels/day, Saudi Arabia currently produces about 9 million barrels/day as part of production cuts initiated by OPEC and its allies in October 2022 and further voluntary cuts by Saudi Arabia and other OPEC+ members in April 2023, all designed to stabilize oil prices.

Following an OPEC+ meeting in June 2023, Saudi Arabia – the world’s top crude exporter – announced a further oil production cut of 1 million barrels/day.

“Looking ahead, I expect our portfolio to continue to evolve as we aim to contribute to an energy transition that offers solutions to climate challenges, but at the same time recognizes the need for affordable, reliable, and flexible energy supplies,” added Amin Nasser, Aramco’s President and CEO.

Aramco’s chemicals arm SABIC and China’s Fujian Energy and Petrochemical Group Co held a groundbreaking ceremony to mark the start of construction at the SABIC Fujian Petrochemical Complex in China’s Fujian province during the first quarter.

The project will include a mixed-feed steam cracker with up to 1.8m tonne/year ethylene (C2) capacity and various downstream units producing ethylene glycols (EG), polyethylene (PE), polypropylene (PP) and polycarbonate (PC), among other products.

Thumbnail photo : One of Aramco’s US offices (Source: Saudi Aramco)