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The stuttering proposal, due to the reluctance of foreign investors to put their money in a market that is no longer attractive, given the possibility of the September 14 attacks that attacked the facilities of “Abqaiq” and “Khurais”, vanished the hopes of including the oil group in the global stock market. Starting this year another setback was added, with the spread of the Crown epidemic and later the collapse of the OPEC + deals on March 6 after the Russians withdrew from the alliance, leading to borrow a quota war between Saudi Arabia and Russia. Two factors lost approximately two-thirds of their value in the first quarter: World Brent crude prices fell 65.6% before OPEC + producers agreed in the middle of last month to cut supplies by 9.7 million barrels per day for the fifth and sixth months, to be contracted These deductions gradually until April 2022.
Aramco’s average daily production in the first three months of this year was 9.7 million barrels, according to an agreement whose effects expired in early April, when the company began pumping to its maximum capacity at 12.3 million barrels after the collapse. of the OPEC + talks, earlier Its output will drop to 8.5 this month, due to the new deal. But the US extortion by reducing the level of protection for the Kingdom in case of not implementing additional deductions that help control the market, forced it to announce an additional reduction in the next month that will make its production 7.5 million per day, which is the lowest in almost two decades, in an attempt to increase prices by relieving pressure on stocks at a stage of weak demand, as announced by the Ministry of Energy the day before yesterday.
Aramco is still below the IPO price of 32 riyals
In a report on the company’s performance in the first quarter, Aramco CEO Amin Al-Nasser saw that “the entire world has not witnessed a crisis comparable to the Corona pandemic (Covid 19),” noting that “we have to adapt to these very complicated developments”. And changing at a rapid pace. The company expects that the decline in global oil demand will affect the rest of 2020, as Al-Nasser said: “Looking at the remaining months of 2020, we expect Corona to affect global energy demand and oil prices, which will time will be reflected in the company’s income. ” “In the long run, the company continues to rely on growing energy demand as global economies recover.”
The net profits of the giant oil group amounted to 62.5 billion rials ($ 16.66 billion) in the first three months of the year, compared to $ 22.2 billion in the same period last year . He also explained that the performance of the first quarter was affected by the decrease in world demand for crude oil, which led to a decrease in oil prices “and continued pressure on the margins of profits from refining and chemical products.” Despite declining earnings, the government oil giant’s cash flow remains strong compared to other major oil companies, reflecting the strength and soundness of its financial statements.
In the context of the announcement, the company’s shares rose 1.3% to 31.30 riyals, but it is still below the initial public offering price of 32 riyals. It is noteworthy that almost all the major oil companies recorded losses in the first quarter, but “Aramco” relies on the low cost of production to achieve profit. However, the group said it has implemented “additional measures to improve spending, which has lowered the expected capital expenditures for 2020.” It also expects the size of its capital expenditures for fiscal year 2020 to range between $ 25-30 billion, compared to $ 32.8 billion in 2019.
