The giant Saudi national oil company, Aramco, announced today, Sunday, that it expects to reduce capital spending, after it said that the net profit of 2020 fell by 44.4%, affected by the decline in crude prices and quantities sold and the decline in profit margins of refineries, in light of pressure on demand due to the Corona pandemic.

The company cut its spending forecast to about $ 35 billion from a range of between $ 40 and $ 45 billion previously, according to the exchange's disclosure.

Aramco announced a cash dividend of $ 75 billion for the year 2020, and indicated that it was noticing an improvement in oil demand.

"Distributions are in line with expectations, which is what matters most to Aramco shareholders, but the decline in capital spending indicates that the company does not expect the rise in oil prices to last for long," said Hassanein Malik, director of equity research at Tellimer.

Aramco shares fell 0.6% after the company announced its results.

The stock held up well for most of the past year 2020 compared to international oil companies in emerging and developed markets, but its performance was weaker than its counterparts when oil prices recovered.

The net profit decreased to 183.76 billion riyals (49 billion dollars) for the year 2020 ending on December 31, compared to 330.69 billion in 2019.

Analysts had expected a net profit of 186.1 billion riyals in 2020, according to the average estimates made by Refinitiv Eikon.

Falling revenue

Aramco CEO Amin Al-Nasser said, "Going forward, our long-term strategy is on the right track towards improving our portfolio in the oil and gas business. In light of the improvement in the market environment, there is an increase in demand in Asia with signs of improvement elsewhere."

The chief economist at Abu Dhabi Commercial Bank, Monica Malik, said that the decline in Aramco's profits by 44.4% in 2020 comes against the decline in the Kingdom's government revenues from oil sales by 30.7% last year, with the stability of distributions to the government despite the decline in crude prices, so Aramco bears the brunt of the crisis more than the treasury.

Profits of Western oil and gas companies such as Royal Dutch Shell and BP fell to their lowest levels in years in 2020, and ExxonMobil - the largest US energy company - died on the spot. Annual loss to her.

Brent crude recorded $ 64.53 per barrel - upon closing the day before Friday - up from $ 51.80 on December 31, 2020, and oil prices lost about a fifth of their value in the same year.

Aramco said free cash flow was $ 49 billion last year, down from 78.3 billion in 2019.

According to a report from "HSBC" last February, the company will pay $ 5 billion in exchange for its acquisition of a stake in the Saudi Basic Industries Corporation (SABIC) in April.