Saudi Aramco’s profit falls 73%; sticks with dividend despite debt surge

Saudi Arabia’s state-controlled oil giant pressed ahead with a plan to pay $75 billion in dividends this year despite crashing profit and a surge in debt, as the kingdom battles a widening budget deficit.

Saudi Aramco said net income for the three months ending in June fell to 24.6 billion riyals ($6.6 billion), down 73 per cent from a year earlier, after crude prices collapsed. Aramco will pay a dividend of $18.75 billion for the quarter, most of it to the government, which owns around 98 per cent of the company’s stock.

Aramco’s performance and demand for energy will probably improve over the rest of the year as nations ease coronavirus lockdowns, according to Chief Executive Officer Amin Nasser.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies,” he said.

ALSO READ: Saudi Arabia turns off oil tap for Pakistan over deferred payments

The results cap a turbulent period for the world’s biggest oil exporter. Prices briefly turned negative in the US in April as the virus battered the global economy and Aramco slashed hundreds of jobs.

Saudi Arabia and Russia led a push by the Organization of the Petroleum Exporting Countries and its partners to reduce production and prop up crude prices. Although they’ve rallied, Brent is still down 33 per cent this year.

Unlike Aramco, rivals such as BP and Royal Dutch Shell have cut their dividends. “We are committed to delivering sustainable dividends through market cycles, as we have demonstrated this quarter,” Nasser said. “Our intention is to pay $75 billion, subject to board approval, of course, and market conditions.”