Saudi Aramco's Q3 average oil output at 9.5 mil b/d, profit more than doubles

Saudi Aramco, the world's largest oil company, said Oct. 31 that its average oil production reached 9.5 million b/d in the third quarter and its net profit more than doubled thanks to increases in both oil prices and output.

Total hydrocarbon production was 12.9 million boe/d in the third quarter, Aramco said in an earnings statement. It didn't provide figures from a year earlier but there was an increase from the first nine months of 2020, when total hydrocarbon production was 12.4 million boe/d, of which 9.2 million b/d was crude oil.

"Our exceptional third quarter performance was a result of increased economic activity in key markets and a rebound in energy demand, as well as our unique low-cost position, our financial discipline and our proven ability to reliably deliver essential energy and chemical products to our customers," Aramco CEO Amin Nasser said in the statement.

"Some headwinds still exist for the global economy, partly due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future."

Global oil demand is "very healthy" and will reach close to 99 million b/d by the end of this year from 97 million b/d in Q3, with some natural gas customers switching to liquids, Nasser said Oct. 4.

Net income soared to Saudi Riyals 114.09 billion ($30.43 billion) in the third quarter from Riyals 44.21 billion a year earlier, the company said in the statement.

"The increase in net income was primarily the result of higher crude oil prices and volumes sold and stronger refining and chemicals margins in Q3, which were underpinned by rebounding global energy demand and increased economic activity in key markets," it said.

Historic cut

Saudi Arabia and its allies in OPEC+ this year have been unwinding a historic 9.7 million b/d output cut that was implemented last year as the pandemic hit global oil demand.

OPEC+ ministers are set to meet virtually on Nov. 4 when they are expected to reaffirm a 400,000 b/d output hike for December, in line with a July agreement. The coalition has been boosting output by 400,000 b/d per month since August, an increment that will add 2 million b/d by the end of the year.

Aramco's capital expenditure was $7.6 billion in the third quarter, up 19% from a year earlier and the company expects 2021 total to be approximately $35 billion, in line with previous forecasts

"This increase was primarily due to ongoing crude oil increment and other development projects," Aramco said.

Aramco is expected to continuing boosting its capital expenditure for the rest of this year, Mazen al-Sudairi, head of research at Riyadh-based al-Rajhi Capital, said by email. "Results were above our expectation helped by better refining/downstream margins," he said.

"It is natural to expect Aramco to increase capex going forward throughout 2021."

Carbon neutrality

Aramco has begun work to boost its maximum sustainable capacity to 13 million b/d by 2027 from 12 million b/d now, from both existing fields and new fields, especially offshore and the project is currently in the front-end engineering phase, Nasser said Oct. 4

"Upstream continues to execute its growth plans to promote long-term productivity of Saudi Arabia's reservoirs and is proceeding with implementing the government's directive to increase its crude oil maximum sustainable capacity from 12 million bpd to 13 million bpd," Aramco said.

Aramco is planning to boost its output capacity while at the same reducing its carbon footprint. It has pledged to achieve carbon neutrality from its own production and activities through eliminating Scope 1 and Scope 2 greenhouse gas emissions by 2050.

"Looking ahead, we are maintaining our strategy to invest for the long term, and we will build on our track record of low-cost and low-carbon intensity performance to advance our recently announced ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across our wholly-owned operated assets by 2050," Nasser said in the statement.