Following less-than-rosy company results, though, amid one of the most challenging years for oil and gas companies, Saudi Aramco is expected to lay significant emphasis on improving business performance by focusing on growth markets such as Asia while keeping a tab on operational expenditures. GlobalData’s Oil & Gas and Business Fundamentals teams offer their view on the announcements:

Commenting on the results, Santiago Varela, Oil & Gas analyst at GlobalData, comments: “Despite having been one of the most challenging years for the oil and gas industry, Aramco has shown signs of being one of the most resilient players. By demonstrating agility and flexibility, it managed to reduce the CAPEX budget and thus maintain a positive net income.

“The most striking thing about the presentation was the payment of $75bn in dividends. The company has had to finance itself externally to meet these commitments, significantly increasing its gearing to 23% in 2021.

“The company’s sustained recovery in demand is also of note, having been driven mainly by the rapid recovery in Asia – especially China and India – but also by advances in vaccination programs in the US and several European countries. That is why work to fulfil the Ministry of Energy’s request to increase the Maximum Sustainable Capacity (MSC) to 13 million barrels per day (mmbpd) in future years has started.

“Although CAPEX guidance for 2021 has been reduced since the original IPO presentation in December 2019, Nasser has shown signs that the allocation of funds would prioritize upstream developments: divided 50% for oil and 50% for gas, that is why we expect a sustained recovery in supply from Aramco in the coming years.

“Nasser also added that although they are interested in gas and LNG export projects, the main objective is to supply Saudi Arabia’s domestic gas demand. Instead, the focus of the company is on scalability on the development of Green and Blue Hydrogen. In this sense, the company took an important step in 2020 by achieving the first large shipment of blue ammonia to Japan.”

“It seems that the LNG train has left for Aramco, Nasser added that although they are interested in evaluating a project related to gas exports, the main objective of gas production is to supply the internal demand of the kingdom. On the other hand, there have been important advances in the Hydrogen business, it is to be expected that Aramco will continue to establish itself as an important player in this industry.”

Parth Vala, Business Fundamentals Analyst at GlobalData, comments: “This has been the second year in a row that Saudi Aramco posted top- and bottom-line drops. The year before, the company was affected primarily due to lower crude oil prices and production cuts, as well as contraction in refining and chemical margins.

“In 2020, the company’s average production of hydrocarbon was about 12.4MMboed, as compared to 13.2MMboed in the previous year.

“As part of its long-term strategy to diversify from the hydrocarbon space, the company intends to capitalize on the development in the hydrogen space through leveraging its large-scale infrastructure, low costs and low upstream carbon intensity to not cede ground to the likes of Europe, China, and Australia to this potentially enormous market.

“GlobalData’s Job Analytics database shows that Saudi Aramco kept its hiring activity low for most of 2020. Active jobs open for recruitment saw a steep decline in Q2 2020 and remained flat in Q3 2020, resonating to the strict lockdown in place across the globe. However, since Q4 2020, hiring saw a marginal uptick with a significant number of mid-level jobs related to business operations and data analysis.

“The database finds that the company is looking at new business development with key job postings related to M&As. A new team was created to operate under the CFO’s office, and job postings related to the team appear since November 2020.”