Saudi Aramco's profit is under pressure in 2024, accelerating its energy strategy transformation
author: Ann
2025-04-02
Saudi Aramco, the world's sixth largest energy giant by market value, recently released its 2024 annual financial report. Data showed that its annual revenue was US$436.6 billion and its net profit was US$106.2 billion, down 0.95% and 14% year-on-year respectively. This financial report not only reveals the industry's predicament under the deep adjustment of the global energy market, but also reflects the strategic choices of oil giants in the era of change.
In 2024, the average price of Brent crude oil futures fell to US$80 per barrel, a decrease of US$2 from the previous year. The drop in oil prices directly impacted Saudi Aramco's revenue performance. Although its crude oil production still reached 10.3 million barrels/day, it fell by 3.7% year-on-year. Faced with the imbalance between supply and demand, the company took the initiative to reduce the production of liquid fuels by 3.7% and fine-tune natural gas production (10.8 billion standard cubic feet/day, a slight increase of 1%), which not only alleviated short-term price pressure, but also reserved space for future market recovery. Although net profit fell sharply by 14% year-on-year, Saudi Aramco still maintained a profit of more than US$100 billion, with free cash flow of US$85.3 billion, providing solid support for operations and strategic investments. It is worth noting that the company's debt-to-asset ratio has changed from -6.3% in 2023 to 4.5%, indicating that it has strengthened its strategic layout by increasing debt financing. Analysts pointed out that while this financial strategy supports transformation, it is also necessary to be vigilant about debt management risks.
As the world's "dividend king", Saudi Aramco announced that its dividend for fiscal year 2025 will drop to US$85.4 billion, a sharp drop of 30% from US$124 billion in 2024. Among them, the basic dividend increased to US$84.6 billion (year-on-year +4.2%), while the special dividend linked to performance dropped sharply to US$900 million (US$43.1 billion in 2024). This adjustment not only reflects the company's intention to maintain shareholder confidence, but also exposes the cash flow challenges under the pressure of oil prices. If the oil price is below US$80 per barrel for a long time, Saudi Aramco may face dividend coverage pressure.
Faced with the bottleneck of traditional business growth, Saudi Aramco is accelerating its strategic reconstruction. In the field of natural gas, the company has invested US$25 billion to develop the Jafurah gas field and plans to increase natural gas sales by 160% by 2030. The gas field has a reserve of 229 trillion cubic feet. After the expansion, it will add 3.2 billion cubic feet of daily processing capacity and cover the whole country through 4,000 kilometers of pipelines, which is expected to contribute 20 billion US dollars to GDP. At the same time, by acquiring 10% of Rongsheng Petrochemical (24.6 billion yuan), Chile's Esmax and Pakistan Natural Gas Company, it will strengthen the control of refining and sales terminals and build a pricing power moat outside the "petrodollar". In addition, it will cooperate with Saudi sovereign fund PIF to develop 2.66 GW photovoltaic projects and explore carbon capture and blue hydrogen technology. Although new energy investment accounts for only 3% of capital expenditure, which is much lower than its European counterparts, it shows its "gradual transformation" path - on the basis of ensuring oil cash flow, it reserves strategic options for the future energy order.
Saudi Aramco's strategic reconstruction is essentially a micro-reflection of Saudi Arabia's "Vision 2030". On the one hand, the oil business is still the lifeline of the economy, and the rapid reduction of traditional production capacity may shake the trillions of dollars of transformation funding foundation; on the other hand, through the natural gas hub, downstream industrial chain control and low-carbon technology reserves, the company is reshaping its voice in the global energy landscape. The fragility and transformation ambitions of traditional energy giants revealed in this financial report are a microcosm of the global energy transformation. When the oil cycle and the climate agenda intersect, Saudi Aramco's choice may determine the transformation rhythm of the entire industry - finding a realistic and forward-looking balance between the afterglow of the old order and the dawn of the new world.
In 2024, the average price of Brent crude oil futures fell to US$80 per barrel, a decrease of US$2 from the previous year. The drop in oil prices directly impacted Saudi Aramco's revenue performance. Although its crude oil production still reached 10.3 million barrels/day, it fell by 3.7% year-on-year. Faced with the imbalance between supply and demand, the company took the initiative to reduce the production of liquid fuels by 3.7% and fine-tune natural gas production (10.8 billion standard cubic feet/day, a slight increase of 1%), which not only alleviated short-term price pressure, but also reserved space for future market recovery. Although net profit fell sharply by 14% year-on-year, Saudi Aramco still maintained a profit of more than US$100 billion, with free cash flow of US$85.3 billion, providing solid support for operations and strategic investments. It is worth noting that the company's debt-to-asset ratio has changed from -6.3% in 2023 to 4.5%, indicating that it has strengthened its strategic layout by increasing debt financing. Analysts pointed out that while this financial strategy supports transformation, it is also necessary to be vigilant about debt management risks.
As the world's "dividend king", Saudi Aramco announced that its dividend for fiscal year 2025 will drop to US$85.4 billion, a sharp drop of 30% from US$124 billion in 2024. Among them, the basic dividend increased to US$84.6 billion (year-on-year +4.2%), while the special dividend linked to performance dropped sharply to US$900 million (US$43.1 billion in 2024). This adjustment not only reflects the company's intention to maintain shareholder confidence, but also exposes the cash flow challenges under the pressure of oil prices. If the oil price is below US$80 per barrel for a long time, Saudi Aramco may face dividend coverage pressure.
Faced with the bottleneck of traditional business growth, Saudi Aramco is accelerating its strategic reconstruction. In the field of natural gas, the company has invested US$25 billion to develop the Jafurah gas field and plans to increase natural gas sales by 160% by 2030. The gas field has a reserve of 229 trillion cubic feet. After the expansion, it will add 3.2 billion cubic feet of daily processing capacity and cover the whole country through 4,000 kilometers of pipelines, which is expected to contribute 20 billion US dollars to GDP. At the same time, by acquiring 10% of Rongsheng Petrochemical (24.6 billion yuan), Chile's Esmax and Pakistan Natural Gas Company, it will strengthen the control of refining and sales terminals and build a pricing power moat outside the "petrodollar". In addition, it will cooperate with Saudi sovereign fund PIF to develop 2.66 GW photovoltaic projects and explore carbon capture and blue hydrogen technology. Although new energy investment accounts for only 3% of capital expenditure, which is much lower than its European counterparts, it shows its "gradual transformation" path - on the basis of ensuring oil cash flow, it reserves strategic options for the future energy order.
Saudi Aramco's strategic reconstruction is essentially a micro-reflection of Saudi Arabia's "Vision 2030". On the one hand, the oil business is still the lifeline of the economy, and the rapid reduction of traditional production capacity may shake the trillions of dollars of transformation funding foundation; on the other hand, through the natural gas hub, downstream industrial chain control and low-carbon technology reserves, the company is reshaping its voice in the global energy landscape. The fragility and transformation ambitions of traditional energy giants revealed in this financial report are a microcosm of the global energy transformation. When the oil cycle and the climate agenda intersect, Saudi Aramco's choice may determine the transformation rhythm of the entire industry - finding a realistic and forward-looking balance between the afterglow of the old order and the dawn of the new world.
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