Saudi Aramco announces spending cut amid coronavirus pandemic
Amin Nasser, president and CEO of Saudi Aramco. Photo: -/AFP via Getty Images
Saudi Aramco plans to cut 2020 spending by billions of dollars below last year's levels as the spread of the novel coronavirus craters global oil consumption and pushes down prices.
Why it matters: Aramco is the world's largest oil-producing company. Sunday's announcement underscores how COVID-19 and the oil market's upheaval is affecting the energy landscape.
The big picture: The company said capital spending this year would range from $25 billion to $30 billion. That's down from almost $33 billion last year and, as Bloomberg notes, a sharp revision from prior plans to spend $35 billion–$40 billion in 2020.
- “The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape," president and CEO Amin Nasser said in a statement alongside Aramco's 2019 financial results.
By the numbers: Aramco on Sunday said its full-year profit in 2018 was $88 billion, compared to $111 billion the previous year.
- That's "primarily due to lower crude oil prices and production volumes," though declining margins in its refining and chemicals business played a role too, the company said.
- Nonetheless, Reuters points out that Aramco "remains the world’s most profitable company, beating Western oil majors such as Exxon Mobil Corp, and Apple Inc, which made $55 billion in its last financial year that ended in September."
What's next: Aramco, which began selling shares on the Saudi's domestic stock exchange last year, is cutting prices and planning to boost oil supplies to the market this year.
- Those plans follow this month's collapse of OPEC's joint production-limiting agreement with Russia, which is prompting a push for market share at lower prices.
Go deeper: Saudi Aramco’s profits slip as oil prices Fall (New York Times)