Saudi Aramco, the world’s largest oil-exporting company, said third-quarter profit more than doubled on higher oil prices and improved refining margins.
Net profit in the three-month period to the end of September increased to $30.43 billion, from $11.8bn in the same period a year ago, the company said in a regulatory filing to the Tadawul stock exchange, where its shares are traded.
The results beat the average $28.4bn estimate of analysts polled by Reuters.
Net profit increased 19.5 per cent from the second quarter of this year. Aramco said it will pay a third-quarter dividend $18.8bn in the fourth quarter of the year.
Oil prices have rallied this year amid a global energy crunch and rising demand. Brent, the international benchmark under which two thirds of the world’s oil is traded, has rallied about 62 per cent this year and ended trading at $83.70 on Friday. West Texas Intermediate, the gauge that tracks US crude, has increased about 73 per cent so far and ended trading last week at $83.57.
“Our exceptional third-quarter performance was a result of increased economic activity in key markets and a rebound in energy demand, as well as our unique low-cost position, our financial discipline and our proven ability to reliably deliver essential energy and chemical products to our customers,” Aramco president and chief executive Amin Nasser said.
Net income for the first nine months more than doubled to $77.6bn from $35.02bn in the same period in 2020. The strong results helped Aramco reduce gearing to 17.2 per cent, from 23 per cent, at the end of 2020. The company’s share price rose 1.4 per cent to 38.3 riyals ($10.2) in early trading on Sunday following the results announcement.
“Some headwinds still exist for the global economy, partly due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future,” Mr Nasser said.
Aramco’s cash flow was $28.7bn in the third quarter, compared to $12.4 billion for the same period in 2020.
The company said capital expenditure rose to $7.6bn in the third quarter, up 19 per cent from the same period a year earlier, due to ongoing crude oil increments and other development projects.
Aramco expects 2021 capital expenditure to be about $35bn. The company said it had total hydrocarbon production of 12.9 million barrels per day of oil equivalent in the third quarter, including average crude oil production of 9.5 million barrels per day.
“Upstream continues to execute its growth plans to promote the long-term productivity of Saudi Arabia’s reservoirs and is proceeding with implementing the government’s directive to increase its crude oil maximum sustainable capacity from 12 million bpd to 13 million bpd,” the company said.
As part of the oil company’s investment to expand capacity to 13 million bpd, Aramco is adding to its gas-processing capacity and eliminating liquid burning in the kingdom.
“Looking ahead, we are maintaining our strategy to invest for the long term, and we will build on our track record of low-cost and low-carbon intensity performance to advance our recently announced ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across our wholly owned operated assets by 2050,” said Mr Nasser.
Aramco announced its plans to target net-zero carbon emissions by 2050 last week after the kingdom said it aimed to neutralise its emissions by 2060.
Mr Nasser said there is a need to work on existing energy sources in parallel with moves to invest in new sources.
“The road will be complex but I am confident we can meet them and accelerate our efforts to a low-carbon future,” he said during the Saudi Green Initiative forum.
With the Cop26 climate summit starting on Sunday, several countries have pledged to aim for net zero emissions by 2050, while global airlines, banks and other companies are also focusing on the midcentury goal.
Countries should not “demonise” hydrocarbons as the world rapidly transitions to cleaner forms of energy, Mr Nassar said at the forum.
“What we need to do is work in parallel: we need to work on our existing sources of energy and, at the same time, [bring] in new sources of energy like renewables and hydrogen, and this is exactly what we are doing,” he said.
Aramco holds a 30 per cent stake in the Sudair Solar PV plant through its wholly owned subsidiary, the Saudi Aramco Power Company.
The project, in partnership with Acwa Power and the Water and Electricity Holding Company, better known as Badeel, will be one of the largest solar plants in the region. The first phase of the project is expected to begin producing electricity during the second half of 2022.
“While maintaining our existing resources and growing it over the next 10 years, we will be achieving net zero by 2050, so we are not abandoning our existing sources of energy. At the same time, we have big investment in renewables through hydrogen, non-combustible uses of oil like crude to chemicals, non-metallics,” said Mr Nasser.
“So, we are investing in new sources of energy but at the same time, we are not abandoning our existing sources.”