Saudi Arabia’s state-owned oil giant Aramco said on Sunday (Mar 10) that it boosted its dividends last year despite net profit falling 24.7 per cent to US$121.3 billion on lower oil prices and volumes.

The profit was still the company’s second-highest on record, it said, following a record US$161.1 billion in 2022.

The Saudi government, which directly holds about 82.2 per cent of Aramco, relies heavily on its generous payouts. Saudi Arabia is spending billions of dollars trying to diversify and find alternative sources of wealth having relied on oil for decades.

Aramco declared a base dividend, paid regardless of results, of US$20.3 billion for the fourth quarter. Aramco expects to pay out US$43.1 billion in performance-linked dividends this year, including US$10.8 billion to be paid out in the first quarter. The base dividend was increased 4 per cent from the previous quarter, and the performance-linked dividend was about 9 per cent higher.

The company said capital investments were at US$49.7 billion in 2023, including US$42.2 billion in organic capital expenditure. That was up from US$38.8 billion in capital investments and US$37.6 billion organic capex in 2022.

It forecast capital investments between US$48 billion and US$58 billion this year, growing until the middle of the decade.

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That range is wide because for external investments, “there’s an element of timing that we don’t fully control”, chief financial officer Ziad Al-Murshed said on a media call.

The Saudi government in late January ordered Aramco to scrap its expansion plan to boost production capacity to 13 million barrels a day (mbpd), returning to the previous 12 mbpd target. The capacity decision “is expected to reduce capital investment by approximately $40 billion between 2024 and 2028”, Aramco said.

Most of the savings are expected in the latter years, so how it will be spent will be decided as opportunities arise, Al-Murshed said. Priorities for using the extra cash include sustaining capex, the base dividend, growth capex, additional distributions and further deleveraging, he added.

Free cash flow fell to US$101.2 billion in 2023 from US$148.5 billion in 2022.

Upstream investments including gas will be almost 60 per cent of capex in 2024-2026, including external investments, chief executive Amin Nasser said. Downstream will be around 30 per cent and “new energies” around 10 per cent.

“As we go beyond that, over the next 10 years, upstream will be around 50 per cent, downstream is around 35 per cent and new energies around 15 per cent,” Nasser said.

Investing in gas will help free up more oil for export, as well as produce more liquids associated with gas extraction, he said.

Nasser also said that the oil giant was looking at further opportunities to invest in China, where he said oil demand was robust and growing.

“So far we are in the early part of 2024, demand is healthy and growing in China,” Nasser said on a media call following the release of Aramco’s results. “We see that in terms of their offtake from the different producers around the world.”

Aramco has invested in Chinese refineries with crude supply deals attached and is in talks for more, with a focus on converting liquids into chemicals.

Nasser said the country’s refineries were some of the most fully integrated and had the highest conversion rates. “We are currently looking at some opportunities for investment in China.”

Nasser sees the global oil market remaining healthy throughout 2024. “We expect it to be fairly robust, we are looking at growth of about 1.5 million barrels.”

Nasser put demand for 2024 at 104 million barrels as opposed to an average of 102.4 million barrels in 2023.

Aramco aims to grow its gas production by 60 per cent by 2030 from 2021 levels. REUTERS