State-owned oil company Saudi Aramco will continue to curb its 2020 capital expenditure (capex) as the coronavirus pandemic hurt its earnings in the first half of the year. The company said in a statement that its 2020 capex would be at the lower end of the $25 billion to $30 billion range, compared to its $32.8 billion capex in 2019. In the April-June quarter, the oil giant spent $6.2 billion, with the first half figure standing at $13.6 billion.
Aramco reported a net profit of SAR24.6 billion ($6.57 billion) in the quarter, a fall of 73.4% from a year earlier, a sharper decline than analysts had forecast. The company said spending would be at the lower end of its target between $25 billion and $30 billion. Despite lower profit, the oil giant pledged to pay a $18.75-billion dividend for the quarter, in line with plans to pay a $75 billion dividend for the whole year.
Aramco President and CEO Amin Nasser said that the company’s second-quarter results reflected reduced demand and lower oil prices caused by the health crisis. However, he noted that some markets had signalled a partial recovery as they emerged from lockdown measures and rebooted their economies.
Saudi Aramco will move forward with its diversification strategy, including in the downstream sector. The world’s biggest oil producer completed the $69.1-billion acquisition of a 70% stake in petrochemical giant SABIC in June, which caused heavy losses in the first half of 2020.
