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Saudi Aramco logs 124% profit growth in 2021 as Covid-19 shocks waned

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An advert for Aramco in Riyadh – the oil giant offered shares for the first time in 2019, and markets expect it to open up further, as Saudi Arabia seeks funds to diversify its economy. AFP

Saudi Aramco logs 124% profit growth in 2021 as Covid-19 shocks waned

Saudi Aramco’s net profit soared 124 per cent last year as global growth recovered from the Covid-19 downturn, the oil giant announced on March 20, hours after Yemen’s Huthi rebels targeted some of its sites.

Aramco, the crown jewel of Saudi Arabia’s oil-dependent economy, did not say if the cross-border attacks, which targeted diverse locations in the kingdom, caused damage to its own facilities.

A Saudi-led coalition that supports Yemen’s government against the rebels reported no casualties but “damage” from air defence systems intercepting missiles and armed drones, without specifying whether Aramco’s infrastructure was among sites affected.

“Aramco’s net income increased by 124 per cent to $110.0 billion in 2021, compared to $49.0 billion in 2020,” the company said in a statement.

The oil giant achieved a net income of $88.2 billion in 2019 before the coronavirus pandemic hit global markets, resulting in huge losses for the energy and aviation sectors, among others.

A strong rebound last year saw demand for oil increase and prices recover from their 2020 lows, and Brent crude has lately repeatedly spiked above $100 per barrel, driven by supply concerns centred on the Russia-Ukraine conflict.

One of the world’s largest producers of gas and one of the biggest oil producers, Russia is grappling with mounting Western sanctions.

“Our strong results are a testament to our financial discipline, flexibility through evolving market conditions and steadfast focus on our long-term growth strategy,” Aramco president and CEO Amin Nasser said, acknowledging also that “economic conditions have improved considerably”.

Yemen’s Iran-backed Huthi rebels said on March 20 that they launched cross-border drone and missile attacks on the kingdom, targeting a number of “vital and important” establishments – including Aramco facilities.

The Saudi-led military coalition, meanwhile, said it intercepted and destroyed ballistic missiles launched towards Jizan in southern Saudi Arabia as well as nine armed drones targeting other areas in the kingdom.

“Initial investigations indicate the militia used Iranian cruise missiles that targeted al-Shaqeeq desalination plant and Aramco’s Jizan bulk plant,” it said in a statement, adding other targets included a Dhahran al-Janoub power station, a gas station in Khamis Mushait and an Aramco gas plant in Yanbu.

It said that the “hostile attacks” and scattered debris after interception caused “some material damage”, without specifying which sites were damaged.

The Huthis have repeatedly targeted Saudi Arabia, including Aramco’s sites.

In 2019, aerial assaults on two Aramco facilities in the eastern region temporarily knocked out half of the kingdom’s crude production, underscoring the vulnerability of its infrastructure.

The six-nation Gulf Cooperation Council plans to hold talks in Riyadh from March 29 in the latest bid to end Yemen’s conflict. The Huthis, while saying they are not opposed to talks, have said they won’t travel to “enemy” territory.

CEO Nasser cautioned that the company’s outlook remained uncertain due in part to “geopolitical factors” and, in an allusion to the effect of the recent price spikes on consumers, also noted that “energy security is paramount for billions of people”.

“We [therefore] continue to make progress on increasing our crude oil production capacity, executing our gas expansion programme and increasing our liquids to chemicals capacity,” Nasser added.

Oil-rich Gulf countries, including Saudi Arabia, have so far resisted pressure from Western allies to raise oil output to rein in prices, stressing their commitment to the OPEC+ alliance of oil producers, which Riyadh and Moscow lead.

Saudi Aramco’s statement said capital expenditure in 2021 was up 18 per cent on 2020 at $31.9 billion, a figure it expects to rise to approximately $40-50 billion this year, before further growth.

It also announced a dividend of $18.8 billion for the fourth quarter of 2021.

Aramco floated 1.7 per cent of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world’s biggest initial public offering (IPO).

Saudi Arabia has sought both to open up and diversify its economy, especially since Mohammed bin Salman’s appointment as crown prince in 2017.

Last month, the kingdom shifted four per cent of Aramco shares worth $80 billion to the country’s sovereign wealth fund – a move seen as a possible prelude to further opening up the oil giant.

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