Tuesday 10, July 2018 by Kudakwashe

Saudi Arabia’s Aramco more resilient to oil slump than listed rivals

 

Aramco’s full-year accounts, show that the company’s net income fell by 21 per cent to $13.3 billion in 2016 when oil prices collapsed to a 12-year low of $27.10.

  

Saudi Aramco is more resilient to fluctuations in oil price compared to its listed rivals, its 2016 accounts indicate.

The company’s 2016 accounts give an insight into the state energy giant’s finances ahead of a proposed flotation, reported Reuters.

By comparison, Exxon Mobil Corp, the world’s largest listed oil company’s net income dropped 51 per cent in 2016, while Royal Dutch Shell, the world’s second listed oil firm’s earnings attributable to shareholders, dropped 37 per cent.

Aramco’s ability to withstand price shocks is attributed to the company’s low production costs given that its major operations are concentrated in Saudi Arabia and because it has fewer employees than its biggest rivals.

Additionally, the accounts show that 67,718 people worked for Aramco in 2016 compared to 71,100 at Exxon and 89,000 at Shell.

The Saudi Arabia oil giant’s production are estimated to be below $1 per barrel compared to $10 per barrel in places like Russia and as much as $20-30 per barrel in locations like the North Sea.

Aramco produces around 10 million barrels per day (bpd) compared with Exxon’s and Shell’s oil equivalent of 4 million bpd and 3.7 million bpd respectively.

A listing of up to five per cent of Aramco has been the centrepiece the Government’s plan in line with the kingdom’s Vision 2030, the oil giant is valued at $2 trillion, if and when it decides to list its stock, Exxon is worth $350 billion.

  

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