Aramco profit drops by 20%

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DUBAI, May 9, (AP): Oil giant Saudi Aramco reported a first-quarter profit on Tuesday of $31.88 billion, down nearly 20% from the same period last year as energy prices have sunk over global recession concerns.

The firm known formally as the Saudi Arabian Oil Co. blamed the drop – compared to $39.47 billion in the same quarter last year – on the lower crude oil prices. Aramco made a $30.73 billion profit in the fourth quarter of last year. “We continue to deliver high reliability and low cost of production financially,” Aramco President and CEO Amin H. Nasser said on a conference call with analysts. “We continue to generate strong earnings and cash flows further, demonstrating our ability to deliver through oil price cycles.” Benchmark Brent crude traded Tuesday around $76 a barrel, down from a high of $125 in the last year. Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude.

For every $10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $40 billion a year, according to the Institute of International Finance. In March, Aramco announced earning $161 billion last year, claiming the highest-ever recorded annual profit by a publicly listed company and drawing immediate criticism from activists amid concerns about climate change. However, as prices drop, so do Aramco’s revenues. “Aramco is a very simple machine: It’s oil production times price, minus a little bit of cost,” said Robin Mills, the CEO of Qamar Energy, a Dubai-based consulting company. “Profit is down.

That’s all oil-price driven.” While saying Aramco was “working to further reduce the carbon footprint of our operations,” Nasser remained bullish on the world’s need for fossil fuels, citing future estimated demand from China and India. “We continue to believe that oil demand is likely to grow, and we believe that the world will continue to need oil and gas for the foreseeable future to support a sustainable and affordable energy transition,” Nasser said. “Our concern remains that the industry is not investing enough to meet expected future demand.”

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