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Saudi Aramco Offers Dividends Worth $100bn Despite Dwindling Profits

Payout by the state-owned oil corporation of Saudi Arabia is expected to infuriate proponents of energy companies.

Aramco, the state-owned oil firm of Saudi Arabia, has distributed dividends of around $100 billion (£77 billion), even though the company’s yearly profits have declined from the record gains achieved the previous year.
According to the group’s annual records, in which the Saudi government holds an 82% stake, payouts to shareholders climbed by 30% to $97.8 billion in 2023.

Due to a decline in oil prices and fewer sales than in the prior year, overall profits decreased by slightly less than 25% to $121.3 billion.

Despite this decline, Saudi Aramco‘s earnings was the second-highest amount ever disclosed, trailing only its record $161.1 billion in 2022—the greatest profit ever recorded by an oil or gas company. Rising oil prices as a result of Russia’s full-scale invasion of Ukraine in early 2022, which impacted worldwide supply, was a major factor in the record-breaking 2022 results.
The benchmark oil price, Brent crude, dropped to as low as $67 per barrel last year from a peak of around $120 per barrel in the middle of 2022. Notwithstanding worries that Middle Eastern tensions would drive crude prices above $100 per barrel, it is now trading at roughly $82.

Campaigners who have denounced the massive profits generated by energy corporations and the bonuses given to their executives since the spike in commodity prices, against the backdrop of a crisis in household costs of living, are likely to be incensed by the dividend payout. The new BP CEO’s £8 million salary was called “sickening” on Friday.
It is anticipated that some of the other major oil companies in the globe may match Aramco’s enormous payout. The five other major oil firms, BP, Shell, Chevron, ExxonMobil, and TotalEnergies, were predicted in a January analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) to pay dividends in 2023 that would surpass the $104 billion distributed last year.

According to Aramco, its performance-related dividend would climb by 9% to $43.1 billion in the fourth quarter of 2023 from its base dividend of $20.3 billion, which was up 4% from the same period the previous year.
The corporation increased its capital expenditures from $38.8 billion in 2022 to $49.7 billion in 2023. Additionally, it forecasts that this investment will expand to a total of $48–58 billion this year and more by the middle of the decade, with a portion of the funds going into non-oil initiatives.

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