Saudi Arabia’s state oil giant Aramco reported a 14% decline in first-quarter net income to $27.3 billion, in line with analyst estimates and down from $31.9 billion a year earlier. Despite the lower earnings, the company expects to pay $31 billion in dividends to the Saudi government and its shareholders.
The Saudi government, which directly holds about 82.2% of Aramco, relies heavily on the company’s payouts, which also include royalties and taxes. The kingdom is seeking to diversify its economy away from crude oil, spending billions of dollars on various initiatives.
Aramco declared base dividend payouts for the first quarter totaling $20.3 billion, which will be fully covered by first-quarter profit. Additionally, the company will pay a performance-linked dividend distribution of $10.8 billion in the second quarter.
The company introduced a special performance-based dividend last year based on record earnings for 2022 and on earnings for 2023, and it expects total dividends of $124.3 billion to be declared in 2024, including $43.1 billion in performance-linked dividends.
The decline in Aramco’s first-quarter net income was attributed to lower oil prices and volumes sold. OPEC+, of which Saudi Arabia is a key member, has implemented a series of output cuts since late 2022 amid rising output from the United States and other non-member producers, as well as concerns over demand as major economies grapple with high interest rates.
With a projected budget deficit of 79 billion riyals ($21.07 billion) this year, the kingdom could delay parts of its multiple mega projects. The Saudi government has also ordered Aramco to scrap its expansion plan to boost production capacity to 13 million barrels a day, returning to the previous 12 million barrels a day target.