Saudi Aramco’s oil production in the first quarter of 2020 fell by 3% to 9.8 million bpd from 10.1 million bpd in the same quarter in 2019. The world’s largest oil company reported a 25% fall in Q1 net profit after zakat and tax to SAR62.48 billion ($16.64 billion), lower than analyst estimates of a $17.8 billion profit. Meanwhile, operating cash flows dropped to $22.4 billion in the first quarter from $24.5 billion in the same quarter last year.
Aramco said its upstream capital expenditure dropped 2% from a year earlier, while downstream capex increased 27%. The coronavirus pandemic hit Aramco’s downstream operations hard in Q1. Its downstream segment posted an EBIT loss of SAR19.0 billion ($5.05 billion), compared to an EBI profit of SAR5.1 billion in the same quarter last year.
Aramco attributed the loss to the declining crude and refined product prices. In addition, Refining and chemical margins were squeezed by the slowdown in the global economy. Despite the loss, Aramco claimed that its downstream segment was keeping pace with its drive to integrate and diversify operations to capture value across the hydrocarbon value chain.
The company also said that it would maintain its capex at $25 billion-$30 billion, in line with its guidance for this year. However, some analysts expect Aramco to implement cost-saving measures to cushion damage from the current market environment.
