“Company Provides 0bn in Dividends Despite Declining Profits”

Saudi Aramco, the state-owned oil corporation of Saudi Arabia, has announced dividends worth a staggering 0 billion despite a decrease in annual profits compared to the previous year. The decision to distribute such a huge amount in dividends is likely to anger supporters of energy companies.

In 2023, Aramco’s profits dipped by nearly 25% to 1.3 billion due to lower oil prices and reduced sales compared to the record-breaking earnings of 1.1 billion in 2022. The drop in profits comes as a result of the decline in oil prices following Russia’s invasion of Ukraine in 2022, which disrupted global supply chains. Despite the decrease, Aramco still managed to report the second-highest profit ever recorded by an oil or gas company.

The benchmark oil price, Brent crude, fell to per barrel last year from a peak of 0 per barrel in 2022. Currently, it is trading at around per barrel. Campaigners critical of energy corporations’ substantial profits and executive bonuses amid rising household costs are expected to criticize Aramco’s dividend payout. The recent controversy surrounding the new BP CEO’s £8 million salary amplifies concerns about excessive corporate rewards.

Aramco’s performance-related dividend for the fourth quarter of 2023 is set to increase by 9% to .1 billion from a base dividend of .3 billion. The company also raised its capital expenditures from .8 billion in 2022 to .7 billion in 2023, with plans to further expand investments in non-oil initiatives in the coming years.

Other major oil companies like BP, Shell, Chevron, ExxonMobil, and TotalEnergies are expected to follow suit with significant dividend payouts. An analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) suggests that these companies may collectively distribute dividends surpassing the 4 billion paid out last year. Despite the challenges in the energy sector, Aramco remains optimistic about its investment strategy and aims to increase spending in non-oil projects in the future.

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