Saudi Aramco CFO expects oil demand to grow in mid- to long-term

Ziad Al-Murshed, Saudi Aramco Executive Vice President and Chief Financial Officer (CFO)

Saudi Arabian Oil Co.’s Executive Vice President and Chief Financial Officer (CFO), Ziad Al-Murshed, said that demand for oil is expected to grow in the medium- to long-term.

During the investor presentation for Q3 2023, Al-Murshed noted that oil demand is currently at an all-time high, despite some volatility in the near term.

In addition, the CFO cited an increase in profits after interest and taxes in the refining, petrochemicals, and marketing segments, saying the increase was due to a rise in refining profit margins, gains from inventory valuation, and an increase in net income and cash flow from operations, with the exception of capital movements compared to the previous quarter.

Saudi Aramco has a solid financial position with a balance sheet gearing of 7.6% in Q3 2023, Al-Murshed stressed, adding that the company continues to achieve high levels of reliability and resilience while maintaining fiscal discipline and focusing on value-accretive investments.

Moreover, the company continues to pursue its growth strategy through investments in integrated and developing businesses and by maintaining its position as a favorable supplier of traditional, low-cost, and low-carbon sources of energy.

“We are seeking to boost our leading position in terms of fuel types and solutions for low carbon emissions,” Al-Murshed noted.

Saudi Aramco's dividend distributions are known for their downside resilience, upside sharing, and growth reinvestment. The company paid $29.4 billion in dividends in the third quarter, including the first performance-linked dividend distribution of $9.9 billion and the base dividend of $19.5 billion in the third quarter, which will be paid in the fourth quarter.

Al-Murshed also mentioned another distribution of approximately $9.9 billion to be paid in Q4, indicating that the performance-linked dividend totals $9.7 billion, almost with no change.

Aramco’s board decision to maintain same-level dividends in Q3 was propelled by the third quarter, which included $3.4 billion in payments on Aramco’s acquisition of a 10% equity interest in Rongsheng Petrochemical in July 2023, in addition to the working capital increase on higher prices.

The CFO also noted that Aramco is investing in its growing, integrated portfolio through the largest capital program in its history, as capital investment guidance reaches $48–52 billion, including international investments.

Capital investments stood at $37.5 billion in the first three quarters of the year, including international investments. Meanwhile, capital investments increased by 42% year-on-year (YoY) in Q3.

Saudi Aramco will determine 2024 capital expenditure guidance when reporting 2023 full-year results in March 2024, Al-Murshed indicated, expecting capital spending (CAPEX) to grow during the implementation of growth plans.

As for the project developments, Aramco will increase raw gas processing capacity by 800 million standard cubic feet per day (mmscfd), including approximately 750 mmscfd of sales gas processing capacity, through Hawiyah Gas Plant expansion.

In addition, AOC, a wholly owned subsidiary of the company, entered into definitive agreements to acquire a strategic minority stake in MidOcean Energy, which is currently in the process of acquiring interests in four Australian LNG projects, with a growth strategy to create a diversified global LNG business.