Saudi oil giant Aramco to scale back spending after 45% profit slump in 2020

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Saudi oil giant Aramco to scale back spending after 45% profit slump in 2020

Aramco, the OPEC-kingpin Saudi Arabia’s state-backed oil industry mogul and the world’s most profitable company on an unaudited basis, took a tattering header of 45 per cent in profits last year due to the pandemic’s fiscal fallouts, however, the state-backed oil giant has been heavily pricing in on a recovery in energy demands this year which it expected to be stemmed off a rebound in Asian-led factory activities, the company said in a statement on Sunday.

Apart from that, after reporting a sharp downward spiral in net profits last year earlier in the day, the energy industry megalith had said that it would momentarily scale back capital spending plans, nonetheless, the company had also added that it had been contemplating China as a major market over next fifty years amid an intransigent drive from the United States and EU to be carbon-neutral by 2050.

Aramco scales back spending plans to $35bn from previous $40-$45 billion

In point of fact, the world’s largest oil exporter said in the statement earlier in the day that its net profit had tumbled nearly 45 per cent to $49 billion in fiscal 2020 that ended on December 31, compared to a reading of $88.17 billion in net profits registered in 2019, taking a lofty whiplash largely due to a pandemic-led fiscal downturn alongside a price-war over market share in March last year that had dragged US crude futures’ prices down to a record negative-$37 a barrel.

Besides, followed by a steep setback at its profit last year, Aramco had dropped its forecast for capital expenses to $35 billion in 2021 from a slated range between $40 to $45 billion, a regulatory filing with Saudi’s Tadawul bourse had unveiled.

Meanwhile, expressing sheer optimism over a sharp uprising in crude oil demands this year which might reach as many as 99 million bpd (barrels per day) by Spring, Aramco Chief Executive Amin Nasser said to the reporters in a post-earnings’ call, “We are pleased that there are signs of a recovery.

China is also very close to pre-pandemic levels. So, in Asia, East Asia in particular, there is strong pickup in demand”.