Saudi Aramco boosts dividends despite a sharp decline in profits

Saudi Aramco, the powerhouse in the Saudi oil sector, unveiled its financial outcomes for 2023. The corporation saw its profits drop by 25%, amounting to $121.3 billion, down from $161.1 billion the previous year.

Despite these challenges, Saudi Aramco opted to boost its dividend payout. For the fourth quarter alone, dividends soared by 4%, exceeding $20 billion. Moreover, the performance-dependent dividend is set to climb by 9%, reaching $10.8 billion. Consequently, the Saudi government along with the company’s shareholders are poised to receive roughly $31 billion, as estimated by CNBC.

The company attributed this decline in profit to a combination of reduced pricing, lower sales volumes, and shrinking refinery margins. Nonetheless, oil continues to hold its allure.

"This has been a year where global demand for oil hit unprecedented levels, despite economic constraints, inflationary pressures, and geopolitical uncertainties. We anticipate the international oil market will maintain its robustness," declared Amin Nasser at the Sunday press briefing.

On delving deeper, it was found that the company’s total revenue dipped by 17%, landing at $441 billion, compared to $535 billion the year before.

The figures related to dividends paid out in 2023 are particularly noteworthy. In sum, these payouts approached $100 billion (accurately $97.8 billion), marking a 30% increase from 2022.

This surge in dividends is of paramount importance nationwide. "The disbursement remains a vital revenue stream for Crown Prince Mohammed bin Salman, who aims to channel oil profits into the kingdom’s ambitious modernization program and diversify its economy," underscored the "Financial Times."

Saudi Aramco’s acquisition of a stake in the Gdańsk Refinery was part of PKN Orlen and Lotos's merger strategy. Following this acquisition, Saudi Aramco now controls half of the gasoline and diesel output from the Gdańsk facility.

Regarding the merger of Orlen with the Lotos Group, the Płock district prosecutor's office commenced an investigation on 22 January this year.

The inquiry by the Płock District Prosecutor’s Office is focused on allegations of authority abuse and neglect of duty by members of the PKN Orlen board, among other concerns.

The supreme audit office reported that the sale of Lotos’s assets was undervalued by at least 5 billion PLN (around £988 million), with the merger leading to the state losing strategic control over approximately 20% of its gasoline and diesel output.

According to the Supreme Audit Office, Aramco’s investment in the refinery is expected to become profitable within 15 months, based solely on product sales margins.

The merger required Orlen to divest some of its market shares, a condition set by the European Commission for merger approval. An agreement with the Saudis was reached, where Orlen divested 30% of its shares in the Gdańsk refinery to Saudi Aramco, additionally securing more oil for Poland.

These recent decisions have sparked widespread controversy, particularly regarding the contract terms safeguarding Polish interests in potential future sales, and concerns over the sale price of the refinery. Moreover, the relationship between the Saudis and Russia, along with their cooperation within OPEC+, also raises questions.