MOSCOW (MRC) -- Saudi Aramco’s downstream business, which includes the company’s refining and chemicals segments, has swung to an EBIT loss of 2.98 billion Saudi riyals (USD795 million) in the third quarter from a profit of SR3.00 billion in the prior-year period, according to Chemweek.
The year-on-year (YOY) decline “reflects a challenging market environment that continues to weaken refining and chemicals margins,” it says. The negative result also widens from an EBIT loss in the second quarter of SR1.29 billion.
Aramco, which does not break out its chemicals earnings separately, says the downstream result for the first time incorporates a full quarter of earnings from Sabic, following the closing of its USD69.1-billion acquisition of a controlling 70% ownership stake in June. “Integration with Sabic continues to progress and drives forward the downstream strategy of creating value from integration across the hydrocarbon value chain,” Aramco says. Sabic last week reported a net profit of SR1.09 billion for the third quarter, up 47% YOY.
Downstream capital expenditures (capex) for the third quarter totaled SR6.16 billion, down from SR6.44 billion a year earlier, with the decrease partially offset by the inclusion of Sabic’s capex. Aramco’s gross refining capacity in the quarter was 6.4 million b/d of crude, up 1.0 million b/d YOY.
Group net income for the third quarter was down over 44% YOY to SR44.21 billion (USD11.8 billion), beating the company-provided analyst consensus estimate of USD10.6 billion, but up on Aramco’s second-quarter group net income of SR24.62 billion. The company’s nine-month net income declined over 48% YOY to SR131.31 billion. For the first nine months of the year, Aramco’s downstream segment consumed 39.5% of the company’s crude oil production, slightly up compared with the prior-year period.
The company “saw early signs of a recovery in the third quarter due to improved economic activity, despite the headwinds facing global energy markets,” says president and CEO Amin Nasser. “Aramco’s integration with Sabic is proceeding as planned.” The company will continue to adopt a “disciplined and flexible approach to capital allocation in the face of market volatility. We are confident in Aramco’s ability to manage through these challenging times and deliver on our objectives,” he says.
Aramco also says it will maintain its commitment to its shareholders by declaring a dividend of USD18.75 billion for the third quarter, matching what it paid in the second quarter.
As MRC wrote before, Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to reevaluate their crude-oil-to-chemicals project in Yanbu on the kingdom's west coast, according to an Oct. 18 statement on the Tadawul stock exchange, as they slash spending due to low prices. The USD20 billion project may be downsized to use Aramco's existing facilities in the port city, instead of building a new plant, the statement posted by SABIC said.
We remind that in June, Aramco said it had completed the share acquisition of a 70% stake in SABIC from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyals 259.125 billion (USD69.1 billion). Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million mt, including agri-nutrient and specialty products.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
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