Oil giant Saudi Aramco plans to invest around $35 billion this year, significantly lower than the previous guidance of $40 billion to $45 billion as the company continues to assess its capital expenditure and efficiency programmes.

Aramco posted net income of $49 billion for 2020, down 44% year-on-year, while cash flow from operating activities last year was $76 billion.

Even so, the oil heavyweight on Sunday declared it would pay a full-year dividend of $75 billion — most of which will go straight into the government’s coffers.

“As the enormous impact of Covid-19 was felt throughout the global economy, we intensified our strong emphasis on capital and operational efficiencies,” said chief executive Amin Nasser.

“As a result, our financial position remained robust and we declared a dividend of $75 billion for 2020.”

Aramco claimed its gearing ratio as of 31 December 2020 was among the lowest in the industry. Meanwhile, its ROACE (return on average capital employed) of 13.2% was the highest in the industry.

The operator last year produced an average 12.4 million barrels of oil equivalent per day including 9.2 million barrels per day of crude oil.

Production peak

Aramco in April achieved its highest ever crude output of 12.1 million bpd. The company achieved another milestone in August, producing a single-day record of 10.7 billion cubic feet per day of natural gas from its conventional and unconventional fields.

“In one of the most challenging years in recent history, Aramco demonstrated its unique value proposition through its considerable financial and operational agility,” said Nasser.

“Our exceptional performance during such testing times owed much to the unwavering spirit and resilience of our employees, who set operational records and continued to meet the world’s energy needs both safely and reliably.”

Aramco’s 2020 capital expenditure totalled $27 billion due to the implementation of optimisation and efficiency programs, a significant saving on the $33 billion capex one year prior.

The company noted that technology and innovation are key to delivering more energy with fewer emissions.

Nasser added that Aramco had accelerated the deployment of digital technologies across the company that significantly enhanced its performance last year, plus the company continued to make progress on breakthrough low-carbon solutions.

“Looking ahead, our long-term strategy to optimise our oil and gas portfolio is on track and, as the macro environment improves, we are seeing a pick-up in demand in Asia and also positive signs elsewhere,” he said.

“We remain confident that we will emerge on the other side of this pandemic in a position of strength.”

Aramco continued to make advances in cutting edge technology and received a company record of 683 US patents in 2020.

Carbon footprint

The company further claimed it maintained one of the lowest upstream carbon footprints in the industry, achieving an estimated upstream carbon intensity of 10.5 kilograms of CO2 per barrel of oil equivalent in 2020.

Aramco’s estimated upstream methane intensity was 0.06%.

It said the accomplishments are the result of the company’s decades-long reservoir management and production approach, which includes leveraging advanced technologies and minimising emissions and flaring.

Aramco added it is well positioned to capitalise on developments in hydrogen given its scale, infrastructure, low costs and low upstream carbon intensity. One promising area is said to the conversion of hydrocarbons to hydrogen and then to ammonia, while capturing the CO2 created during the process.

Aramco last August exported the world’s first shipment of high-grade blue ammonia to Japan for use in zero-carbon power generation, a significant step towards sustainable hydrogen usage.

In January 2020, Aramco joined the Hydrogen Council as a steering member. The organisation promotes collaboration between governments, industry and investors to provide guidance on accelerating the deployment of hydrogen solutions globally.