Fitch affirms Saudi Aramco’s long-term IDR at 'A'

Fitch Ratings affirmed Saudi Aramco’s Long-Term Issuer Default Rating (IDR) at 'A', revising Outlook to Negative from Stable.

The world’s largest oil producer’s standalone credit profile (SCP) was assessed at 'aa+'.

Saudi Aramco's financial profile is conservative compared with that of international integrated oil producers.

Saudi Aramco's business profile is very strong. Its lifting costs (USD2.8/boe in 2019) and upstream capex (USD4.7/boe) are much lower than those of international integrated firms and some national oil companies - a significant advantage in times of volatile oil prices. Its business profile also benefits from a very large scale of production and vast proved reserve life in excess of 50 years. However, Saudi Aramco is more exposed to energy transition risk than oil majors, particularly in Europe, as it is less integrated into natural gas and is not planning to diversify into renewables on a large scale.

“We project that at end-2021 Saudi Aramco's funds from operations (FFO) net leverage will be around 1.0x, compared with Royal Dutch Shell's 1.0x, Total SE's 1.4x and BP plc's 2.2x,” Fitch said.

Fitch projects that leverage in 2020-2023 will remain on the upper end of our sensitivities for the SCP, and that additional measures may be needed to bring gearing in line with the company's own targets (5%-15% through the cycle), such as disposals or dividend cuts.