Saudi Arabia’s state-owned oil giant is preparing to pay out almost £100bn to fund crown prince Mohammed bin Salman’s series of mega-projects, despite a fall in profits.
Aramco said it expected to pay out $124bn (£99bn) this year to its shareholders – primarily the government in Riyadh or sovereign wealth funds – compared to $98bn in 2023.
That was despite the company reporting a 14pc fall in profits to $27.3bn in the first quarter of 2024.
Saudi Arabia remains heavily dependent on Aramco for its finances, with oil needing to be at about $96 per barrel or more to balance the state budget, according to the International Monetary Fund.
On Tuesday, benchmark crude prices were hovering below $84 per barrel.
It comes as the crown prince, also known as MBS, is in need of funds for a series of major projects aimed at radically reshaping the kingdom’s economy to make it less dependent on oil.
Schemes being developed include tourism sites such as museums and marine life centres, an opera house, a resort and new airport next to the Red Sea and a $500bn “smart city” in the desert known as Neom, at the country’s northwest tip.
The kingdom has already scaled back work on some of these projects after three straight quarters of economic contraction, however.
Mohammed Al Jadaan, the Saudi finance minister, has said that the economic transformation plan – known as Vision 2030 – will be adjusted as needed.
This includes Neom, with the site’s flagship development, a futuristic city known as “the Line”, scaled back from being as much as 170km long to just 2.4km.
Saudi Arabia and other major oil-producing nations in the Opec+ cartel have been cutting output since late 2022 as higher production by the United States puts downward pressure on prices.
In January, Riyadh ordered Aramco to scrap plans to boost production to 13 million barrels per day and instead told it to maintain the previous 12 million target.
But with the price of Brent crude still below the kingdom’s required level, the government is facing a budget deficit of 79bn riyals (£16.8bn) this year.
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