Page 4 - DMEA Week 18 2021

DMEA COMMENTARY DMEA

Petchems in

view for Aramco

Buoyed by the improved performance of its downstream
arm during the first quarter of 2021, Saudi Aramco is poised

to further leverage its position of strength in chemicals.

MIDDLE EAST SAUDI Aramco this week announced its results expenditure was $8.2bn.
for the first quarter with its downstream division In accordance with OPEC+ restrictions and
finally coming good, swinging from a major loss Saudi Arabia’s unilateral voluntary extra cut of
WHAT: to a profit of more than $4bn. 1mn barrels per day, Aramco’s total hydrocar-
Aramco’s improved The company recorded a net profit of bon production dropped to 11.5mn barrels of oil
performance was driven $21.7bn, up from $16.7bn during the same equivalent per day, down from the 2020 full-year
by higher oil prices and period last year. average of 12.4mn boepd, with crude falling by
chemical margins. The company followed other oil majors in 600,000 bpd to 8.6mn bpd during Q1.
announcing improved performance on the back The company benefited from an $8.4 per bar-
WHY: of oil prices having risen by roughly a third and rel increase in the realised price of crude com-
A drop in oil production having remained stable in recent months. The pared to Q1 2020, which averaged $60.2. The
was offset by higher company also maintained its dividend commit- fruits of OPEC+ restraint is particularly glaring
prices, while the ment, paying out $18.75bn for Q4 2020, and said when noting that Aramco’s realised price per
integration of SABIC’s it would pay the same amount for Q1. barrel averaged $40.6 over full-year 2020.
operations is bearing fruit President and CEO, Amin Nasser, said: “The
for Aramco. momentum provided by the global economic Downstream
recovery has strengthened energy markets, and Aramco’s performance was clearly supported by
WHAT NEXT: Aramco’s operational flexibility, financial agility integrating the operations of Saudi Basic Indus-
Further integration and and the resilience of our employees have contrib- tries Corp. (SABIC) in which it acquired a 70%
synergies will be pursued uted to a strong first-quarter performance. For stake from the Public Investment Fund in June
over the next few years as our customers we remain a supplier of choice, for $69.1bn, which it will pay off in instalments
Aramco bundles up and and for our shareholders we continue to deliver until 2028.
spins off its downstream an exceptional quarterly dividend [...] Given the The resultant economies of scale aided the
division. positive signs for energy demand in 2021, there bottom line in Q1 as chemicals margins rose,
are more reasons to be optimistic that better days leading to a 188% increase in Q1 downstream
are coming.” earnings before interest, income taxes and zakat,
While the tone was broadly optimistic, he to $4.4bn.
added that “while some headwinds still remain, This is particularly encouraging given that
we are well-positioned to meet the world’s grow- full-year downstream earnings for 2020 repre-
ing energy needs as economies start to recover”. sented a loss of $5.4bn.
Aramco cited “a stronger oil market and Aramco’s downstream division, with a global
higher refining and chemicals margins, partly refining throughput capacity of 6.584mn bpd
offset by lower production,” as the drivers for and a petrochemicals production capacity nearly
its 30% increase in net profit, while capital 80mn tonnes per year (tpy), is one of the world’s

P4 www. NEWSBASE .com Week 18 06•May•2021