The following are guidelines to help you with your company’s analysis. I have assigned one company to analyze (SAUDIA RAMCO). Nonetheless, you may need to analyze another one or look to the industry ratios if needed, (compare your main company to the industry). The following guidelines are the minimum requirements that you could do. You have SAR 750,000, and you can borrow SAR 250,000 from the bank at an interest rate of 8%. You can buy SAUDI ARAMCO stock; however, you must maintain account of your investment (date of purchase should be on January1, 2024 or later) and then analyze your investment on May 10, 2024. You should demonstrate your understating of the materials through this Report.
You are assigned ARAMCO thus do the following
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Describe your company
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2) Location of company; its main line of business
3) Equity shares versus debts
4) Specify the number of shares valued and total outstanding shares
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6) Any other information you feel the reader should know
2 Step #2 – Data Discovery
The information required includes (but is not limited to):
1) Company Information on:
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b) Operational
2) Industry information
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3 Step #3 – Data Analysis
A. Qualitative Analysis – emphasis is on assessing qualitative risk and competitive advantages or disadvantages.
1) Description and analysis of Subject Company’s
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Conclusion unlocking
unlocking
Investing in growth
Innovating for sustainability
Introduction
We are Aramco,
one of the world’s largest
integrated energy and
chemicals companies
Our Vision
Aramco’s vision is to be the world’s
preeminent integrated energy and
chemicals company, operating in a safe,
sustainable and reliable manner.
Our Mission
Aramco strives to provide reliable,
affordable, and more sustainable energy to
communities around the world, and to
deliver value to its shareholders through
business cycles by maintaining its
preeminence in oil and gas production and
its leading position in chemicals, aiming to
capture value across the energy value chain
and profitably growing its portfolio.
Contents
1. Aramco overview and strategy
History………………………………………………………………… 06
Chairman’s message…………………………………………….. 08
President and CEO’s message……………………………….. 10
2023 highlights……………………………………………………..12
Business model……………………………………………………..14
Aramco’s operations…………………………………………….. 16
Business overview……………………………………………….. 18
Market overview……………………………………………………19
Strategy……………………………………………………………….. 20
2. Results and performance
Key 2023 metrics………………………………………………….. 28
CFO’s message ……………………………………………………. 30
Financial performance…………………………………………. 32
Upstream…………………………………………………………….. 40
Downstream………………………………………………………… 48
Corporate……………………………………………………………. 60
Our Values
By living our values and prioritizing sound
business practices, we consistently achieve
high levels of performance and efficiency
– delivering value not only for our Company,
but for our customers, partners, and the
communities in which we operate.
Safety
Accountability
Citizenship
Excellence
Integrity
For more information on our values, visit:
www.aramco.com/en/about-us/ourgovernance/our-values
3. Sustainability
Aramco’s approach………………………………………………. 64
Four areas of focus………………………………………………. 66
Climate change and the energy transition…………. 66
Safe operations and people development………….. 68
Minimizing environmental impact…………………….. 69
Growing societal value……………………………………… 70
4. Risk
Risk management………………………………………………….74
Risk factors………………………………………………………….. 76
5. Corporate governance
Board of Directors………………………………………………… 92
Senior Executives ………………………………………………… 98
Board structure………………………………………………….. 102
Audit Committee report……………………………………… 107
Sustainability, Risk and HSE Committee report…….. 109
Nomination Committee statement………………………..110
Compensation Committee statement……………………111
Compensation and other interests………………………..112
Governance, risk and compliance…………………………116
7. Consolidated financial statements
Independent auditor’s report………………………. 154
Consolidated statement of income……………….. 162
Consolidated statement of
comprehensive income……………………………….. 163
Consolidated balance sheet…………………………. 164
Consolidated statement of
changes in equity…………………………………………165
Consolidated statement
of cash flows……………………………………………….166
Notes to the consolidated
financial statements…………………………………….167
Online Report
This Annual Report covers financial and
operational aspects of Aramco and is issued in
both Arabic and English.
The print version is identical to its PDF
counterpart, which is available at aramco.com.
The Arabic version prevails in the event
of any discrepancy. The images in this
document are representative of the services
provided by Aramco.
ee our online report:
S
www.aramco.com/en/investors /annual-report
6. Additional financial and legal information
Additional financial information…………………………. 122
Reserves information………………………………………….. 129
Additional legal information………………………………. 130
Forecasts and forward-looking statements………….. 145
Terms and abbreviations…………………………………….. 146
Glossary…………………………………………………………….. 148
The information contained in Sections 1 – 6 of this Annual
Report constitutes the Board of Directors’ report.
SAUDI ARAMCO | ANNUAL REPORT 2023
01
King Salman bin Abdulaziz Al-Saud
The Custodian of the Two Holy Mosques
02
SAUDI ARAMCO | ANNUAL REPORT 2023
His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al-Saud
Crown Prince and Prime Minister
SAUDI ARAMCO | ANNUAL REPORT 2023
03
1. Aramco overview
and strategy
History………………………………………………………………… 06
Chairman’s message…………………………………………….. 08
President and CEO’s message…………………………………10
2023 highlights……………………………………………………..12
Business model……………………………………………………..14
Aramco’s operations………………………………………………16
Business overview………………………………………………… 18
Market overview……………………………………………………19
Strategy……………………………………………………………….. 20
04
SAUDI ARAMCO | ANNUAL REPORT 2023
Supporting the energy transition
Marjan Gas Oil Separation Plant 2,
Marjan field, Arabian Gulf
Aramco supports a practical, stable, and inclusive
energy transition, and has one of the lowest average
upstream carbon intensities for crude oil production
among major producers.
The Company believes all sources of energy are
needed for the foreseeable future, and is delivering
on the largest capital spending program in its history.
The investment includes the Marjan, Berri,
and Zuluf crude oil increment projects.
SAUDI ARAMCO | ANNUAL REPORT 2023
05
We hold 90 years of
global energy leadership
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
History
1933-1944
1945-1965
1966-1988
1989-2017
2018-2023
1933
Crude oil Concession agreement
signed with Standard Oil of
California which created the
California Arabian Standard Oil
Company (CASOC) to manage
the Concession.
1948
Standard Oil Company of New
Jersey, later Exxon, purchased
30% of Arabian American Oil
Company, and Socony-Vacuum
Oil Company, later Mobil,
purchased 10% to help provide
market outlets.
1971
Oil production averaged
4.5 mmbpd.
1989
First international
downstream joint venture
established in the U.S.
2018
Commercial production of
unconventional resources
commenced in north Arabia.
2022
49% of Aramco Gas Pipelines
Company sold to a consortium
of investors.
1991
First Asian downstream
joint venture established
in South Korea.
2019
$12.0 billion of Senior
Unsecured Notes issued and
listed on the London Stock
Exchange.
Established a $1.5 billion
Sustainability Fund.
The birth of Arabian oil
1938
Oil discovered at Dammam
Well No. 7.
1939
Oil exports began.
1944
CASOC renamed the Arabian
American Oil Company.
Expansion
Making a name for itself
1949
Oil production hit 500 mbpd.
1952
Headquarters moved from New
York City to Dhahran.
1958
Oil production exceeded
1 mmbpd.
1965
Oil production exceeded
2 mmbpd.
1973
The Saudi Government acquired
an initial 25% participating
interest in the Concession,
which increased to 60% the
following year.
A global company
1975
Decision made to build the Master
Gas System, enabling one of the
world’s largest gas markets,
transforming the national energy
mix toward natural gas and
building the cornerstone for the
economy’s industrialization.
1993
Aramco assumed the assets
and operations of Saudi
Arabian Marketing and
Refining Company, a
Government-owned inKingdom refining and
international product
marketing organization.
1976
Became the world’s leading oil
producer in terms of volume
produced in a single year.
2009
Petro Rabigh, Aramco’s
first petrochemical plant,
began production.
1980
The Saudi Government increased
its participation interest in the
crude oil Concession rights,
production, and facilities to 100%.
2011
Sadara Chemical
Company formed.
1988
Saudi Arabian Oil Company
officially established.
2014
SATORP and YASREF
refineries came online.
2017
Aramco acquired full
ownership of Motiva.
Transformation and energy security
Aramco became a public
company with shares listed
on the Saudi Exchange.
2020
Highest single-day crude oil
production of 12.1 mmbpd.
Historic acquisition of a 70%
stake in SABIC transformed
Aramco into a major global
petrochemicals producer.
2021
49% of Aramco Oil Pipelines
Company sold to a consortium
of local and international
investors.
Announced ambition to
achieve net-zero Scope 1 and
Scope 2 greenhouse gas
emissions across wholly-owned
operated assets by 2050.
Successfully completed three
landmark transactions with Polish
refiner and fuel retailer PKN
ORLEN, supporting expansion of
Aramco’s global downstream
presence.
Highest single-day natural gas
production record of 11.3 bscfd.
2023
Acquired a 10% interest in
Rongsheng Petrochemical to align
with Aramco’s goal to enhance its
Downstream business in highgrowth geographies.
Acquired Valvoline Inc.’s
global products business
to complement Aramco’s
premium-branded lubricant
products.
First production of unconventional
tight gas at South Ghawar.
Introduced performance-linked
dividends in addition to the base
dividend, providing additional
upside for investors.
Legendary Saudi Bedouin Khamis bin Rimthan tries
out an alidade, Saudi Arabia (photo taken 1955)
In 2023, Aramco celebrated 90 years of creating value.
Saudi tracker and intuitive geographer Khamis bin
Rimthan understood the desert like the back of his
hand, and began working for California Arabian
Standard Oil Company (now Aramco) in 1934.
06
SAUDI ARAMCO | ANNUAL REPORT 2023
In 1938, he helped chief geologist Max Steineke
discover oil in Saudi Arabia, and the Rimthan oil
field was named after him in 1974.
SAUDI ARAMCO | ANNUAL REPORT 2023
07
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
Chairman’s message
Against this backdrop, we believe Aramco has a
number of competitive advantages, including but not
limited to producing crude oil that has one of the
lowest upstream carbon intensities of any major oil
producer. We also have the advantage of being a
single operator with long-term control of a high
concentration of high-quality upstream assets. In
addition to having exclusive access to the Kingdom’s
considerable oil and gas reserves, we also have low
lifting costs and relatively low depletion rates.
While these advantages collectively translate into
a significant position of strength for Aramco, we
are also actively working to further future-proof
your Company.
In 2023, we scaled up our capital program with
investments in both brownfield and greenfield
developments. In Upstream, we continued to progress
our crude oil increment projects that will allow us to
maintain our MSC at 12.0 mmbpd, and we advanced
Dear Shareholders,
2023 served as a historic milestone for your Company.
It was 90 years earlier that the Kingdom signed the
Concession agreement, which in turn led to the
discovery of commercial quantities of oil and which
in time would lead to the creation of Aramco.
Over the subsequent decades, Aramco has become
one of the world’s largest integrated energy and
chemicals companies, reliably serving our customers
while continually creating value for our shareholders.
I am pleased to report that for 2023, your Company’s
long-running value creation story continued
unabated.
Despite uncertainty in the global economy, we
recorded strong earnings and cash flows for the year
due to our strategically integrated Upstream and
Downstream businesses. Our net income for 2023
was SAR 454.8 billion ($121.3 billion).
Delivering value today
Our aim is to deliver a sustainable and progressive
dividend across business cycles, providing both
downside resilience and the opportunity for investors
to share in the upside of our strong performance.
During 2023, we took a significant step in this regard
with the Board approved performance-linked
dividends to deliver a balanced mix of growth and
yield to our shareholders.
08
SAUDI ARAMCO | ANNUAL REPORT 2023
Based on our robust financial performance in 2023
and in line with our desire to maximize shareholder
returns, the Board of Directors has declared a
fourth quarter base dividend of SAR 76.1 billion
($20.3 billion), an increase of 4.0% compared to the
previous quarter, and a performance-linked dividend
distribution of SAR 40.4 billion ($10.8 billion).
Total dividends paid in 2023, including base and
performance-linked dividends, reached SAR 366.7
billion ($97.8 billion), up 30.4% compared to 2022 and
underscoring our aim to maximize shareholder
returns while investing in the future of our business.
In addition to enhanced dividend distributions, one
bonus share for every 10 shares held was also issued
during the year to all eligible shareholders in relation
to Aramco’s 2022 record results.
As well as delivering value to our shareholders, the
men and women of Aramco also pride themselves on
providing value to the Company’s customers with
highly reliable energy supplies. In 2023, our reliability
was 99.8%, maintaining our position as one of the
world’s most reliable crude oil suppliers.
Positioning Aramco for tomorrow
In recent years, Aramco’s investment in Upstream
has been both significant and counter cyclical as we
believe global energy demand will increase over the
mid- to long-term. Our view remains unchanged.
At the same time, we recognize that as the world
undergoes an energy transition, the future will favor
those energy producers who provide the most
sustainable solutions.
Our intention is to play a key role
in the energy transition through
the deployment of technologies
and tools that can contribute to
global emission reduction efforts.
our goal to increase gas production by more than
60% by 2030 compared to 2021 levels. In
Downstream, our focus remains on enhancing our
business in key high-growth geographies, increasing
the placement of the Kingdom’s crude oil in whollyowned or affiliated refineries and converting more of
our hydrocarbon molecules into materials. During the
year we began construction at two major projects in
Asia and one in Saudi Arabia to expand our liquidsto-chemicals production, and we acquired an interest
in one of the largest integrated refining and
petrochemical complexes in China. These activities
should enable us to increase placement of our
upstream crude oil in affiliated refineries. We also
advanced our strategy to strengthen our downstream
value chain internationally with agreements to
acquire interests in the South America and Pakistan
retail markets.
And we also continue to support the Archie Initiative,
a tool which promotes increased transparency within
the global energy supply chain.
During the year, we also continued to back the
development of new industries in the Kingdom
through our iktva and Namaat programs, as well as
our active participation in the Kingdom’s Shareek
program. These initiatives serve two purposes as they
help strengthen the resilience of Aramco’s supply
chain going forward, while also contributing to Saudi
Arabia’s economic growth and diversification.
We also made the decision to more than double
our venture capital funding from SAR 11.3 billion
($3.0 billion) to SAR 26.3 billion ($7.0 billion) through
Aramco Ventures.
Expressing our gratitude
Aramco’s success in 2023 would not have been
possible without the support of many. In particular,
the visionary leadership of The Custodian of the Two
Holy Mosques King Salman bin Abdulaziz Al-Saud,
and His Royal Highness Prince Mohammed bin
Salman bin Abdulaziz Al-Saud, Crown Prince and
Prime Minister of the Kingdom of Saudi Arabia. We
also thank the Kingdom’s Ministry of Energy for their
continued support as well as our shareholders for
placing your trust in Aramco.
On behalf of the Board of Directors, I want to also
convey our collective appreciation to the talented
men and women of Aramco for their continued
commitment in providing reliable energy to our
customers, while also creating value for our
shareholders.
H.E. Yasir O. Al-Rumayyan
Chairman of the Board of Directors
Our intention is to supply our customers with oil and
gas, and also play a key role in the energy transition
through the deployment of technologies and tools
that can contribute to global emission reduction
efforts. As such, we are working on multiple fronts,
including carbon capture and storage, synthetic fuels,
blue hydrogen technologies, renewables, and offsets.
Subject to closing conditions and regulatory
approvals, we will make our first international
investment in liquefied natural gas, an area where
we expect strong demand-led growth as the world
continues on its energy transition journey.
SAUDI ARAMCO | ANNUAL REPORT 2023
09
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
President and CEO’s message
In Asia, we broke ground for two large integrated
refinery and petrochemical complexes, one through a
joint venture in China and the other with our affiliate
S-OIL in South Korea, and we acquired a 10% stake in
a Chinese petrochemical company. All of these
projects support our long-term goal of directing up to
four million barrels per day by 2030 into liquids-tochemicals. Through SABIC, our subsidiary, we also
made a final investment decision to participate in a
world-scale petrochemical complex located in China.
As well, we completed our acquisition of Valvoline’s
global products business and our first downstream
retail investment in South America with our purchase
of Chilean retailer Esmax. We also signed definitive
agreements to acquire a 40% equity stake in Gas &
Oil Pakistan, our first entry into the Pakistani fuels
retail market.
We believe Aramco is well positioned to
actively participate in addressing the
world’s growing need for affordable and
reliable energy.
Dear Shareholders,
Aramco continued to deliver both value and growth
in 2023.
Throughout the year we provided the reliable energy
supplies that our global customer base has come to
expect from Aramco. We also recorded another year
of strong financial performance, which enabled us to
deliver increased value to our shareholders through
the distribution of increased base dividends and the
introduction of performance-linked dividends. And
we continued to deliver on our strategy by growing
our existing core business as well as expanding into
new geographies and working to develop new
businesses such as carbon capture and storage,
synthetic fuels, blue hydrogen technologies,
renewables, and offsets.
Expanding our business
While global oil demand was reaching an all-time
high in 2023, at Aramco we were continuing our
efforts to ensure we can help supply the conventional
energy that we believe the world will need for
decades to come. Our crude oil development and
increment projects remain on track, with the first
phase of the Dammam development project expected
to come onstream this year, followed by the Marjan
and Berri increment projects in 2025 and the Zuluf
field in 2026. Together, these projects will help us
maintain our MSC at 12.0 mmbpd as directed by the
Government, and they support our unique ability to
rapidly respond to changes in the market.
10
SAUDI ARAMCO | ANNUAL REPORT 2023
During the year, we also made significant progress in
our efforts to expand our gas production by more
than 60% of the 2021 levels by 2030. This included
bringing onstream our Hawiyah Gas Plant expansion
and producing the first unconventional tight gas from
South Ghawar. Meanwhile, work is progressing at the
Jafurah unconventional gas project, which is the
largest liquid-rich shale gas development in the
Middle East. Our priority is to meet rising domestic
gas demand in the Kingdom while adding associated
liquids for potential export.
In the third quarter of 2023, we announced our first
international investment in liquefied natural gas
(LNG). Subject to closing conditions and regulatory
approvals, our acquisition of a stake in MidOcean
Energy will give us a strategic position in a commodity
that we anticipate will experience strong demand-led
growth as the global energy transition plays out.
We view LNG as a complementary asset to our
portfolio given gas is a vital fuel and feedstock for
various industries.
We also expanded our Downstream business in 2023
both inside and outside the Kingdom. Engineering,
procurement, and construction contracts were
awarded for a significant expansion at our jointly
owned SATORP refinery in Jubail. When complete,
this new petrochemical complex will include one of
the largest mixed-load steam crackers in the region.
Pursuing our net-zero ambition
In addition to making multiple investments across the
hydrocarbon value chain, we continue to take steps
that support our 2050 net-zero ambition. This includes
working on ways to further lower emissions from our
operations through technological innovation and
adding lower-carbon energy to our own portfolio.
On the technology side, we believe synthetic gasoline
could play a key role in powering the existing global
vehicle fleet. As such, we were particularly pleased
with the results of tests by global automaker Stellantis
on Aramco-provided prototype eFuels, which were
found to be compatible with 24 existing internal
combustion engine families in Europe. To further
determine the viability of such fuels, we are working
with partners to build two demonstration plants:
one in-Kingdom to produce synthetic gasoline for
light-duty passenger vehicles, and the other in
Spain for synthetic diesel and jet fuel for automobiles
and aircraft.
This inaugural shipment and subsequent follow-up
shipments to Asia represent another milestone in the
development of a global market for blue ammonia
and blue hydrogen.
During the year we progressed toward our goal of
investing in 12 gigawatts of solar and wind energy
capacity by 2030. Together with our consortium
partners, we entered into a shareholders’ agreement
for the two Al Shuaibah photovoltaic solar projects,
which are expected to commence commercial
operation in 2025 with a combined capacity of
2.66 gigawatts.
We were also the leading bidder in the world’s
largest-ever carbon-credit auction, which was held by
the Regional Voluntary Carbon Market Company in
Kenya in the second quarter of the year. During the
COP28 climate summit, Aramco also helped support a
charter signed by more than 50 oil and gas producers
to reduce emissions from their respective operations.
Another vital component of Aramco’s strategy is
further localization of our supply chain. We made
advancements on this front as our joint venture
nonmetallic thermoplastic pipe production facility at
King Salman Energy Park commenced operations.
Under our Namaat program and in line with our iktva
objectives, we also signed a shareholders’ agreement
with Baosteel and the Public Investment Fund to
establish an integrated steel plate manufacturing
complex in the Kingdom.
Looking ahead with confidence
We believe Aramco is well positioned to actively
participate in addressing the world’s growing need
for affordable and reliable energy. This belief is not
solely based on the quality of our assets and the scale
of our ambitions, it is also based on the capabilities of
our employees. Indeed, the determination of the men
and women of Aramco is why we believe we will
continue to deliver.
Amin H. Nasser
President and Chief Executive Officer
In 2023, our Yanbu’ Refinery became the fourth
Aramco facility to be added to the World Economic
Forum Global Lighthouse Network in recognition of
its deployment of cutting-edge technologies to
deliver a range of operational and environmental
benefits. While further decarbonizing our operations
remains a priority, we are also supporting our
customers’ efforts to decarbonize. Work continues
with our partners on construction of a large carbon
capture and storage hub at Jubail. The facility is on
track to begin storing up to nine million tons of CO2
per year by 2027. Together with our affiliate SABIC
Agri-Nutrients, we made the world’s first shipment
of accredited blue ammonia during the year.
SAUDI ARAMCO | ANNUAL REPORT 2023
11
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
5. CORPORATE
GOVERNANCE
4. RISK
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
2023 highlights
Reflecting on another year of success
and achievements in 2023
Hawiyah Unayzah
Gas Reservoir Storage
Hawiyah Unayzah Gas Reservoir
Storage, the first underground
natural gas storage in the
Kingdom, achieved its maximum
injection target of 1.5 bscfd.
Acquired Valvoline Inc.’s
global products business
Aramco completed its acquisition of
Valvoline Inc.’s global products business
for approximately SAR 10.34 billion ($2.76
billion), including customary adjustments.
Q1
Amiral EPC contracts awarded
Aramco awarded engineering,
procurement, and construction contracts
for the SAR 41.3 billion ($11.0 billion)
new petrochemical complex to be built
by SATORP, Aramco’s joint venture with
TotalEnergies.
Integrated refinery and
petrochemical complex
Construction commenced at the
SAR 44.4 billion ($11.8 billion)
integrated refinery and
petrochemical complex being
developed by HAPCO, a joint
venture between Aramco, North
Huajin, and Panjin Xincheng.
Yanbu’ Refinery
Saudi Arabia
SAUDI ARAMCO | ANNUAL REPORT 2023
Hawiyah Gas Plant expansion
The Hawiyah Gas Plant expansion was
successfully commissioned and brought
onstream, increasing the plant’s raw gas
processing capacity by 800 mmscfd
including approximately 750 mmscfd of
natural gas capacity.
Largest voluntary carbon auction
Aramco participated as a lead bidder
in the largest-ever voluntary carbon
credit auction, held by the Regional
Voluntary Carbon Market Company
(RVCMC) in Nairobi, Kenya.
Q2
$7.0 billion petrochemical steam cracker
Aramco and its affiliate, S-OIL, commenced
construction at the SAR 26.3 billion ($7.0 billion)
Shaheen project in South Korea to develop one
of the world’s largest refinery-integrated
petrochemical steam crackers.
12
Novel nonmetallic factory begins operations
Novel Non-Metallic Solutions (Novel), a joint
venture between Aramco and Baker Hughes
to develop and commercialize a broad range
of nonmetallic products, commenced
operations in Saudi Arabia.
Performance-linked dividends
Aramco introduced
performance-linked dividends
to support its aim to deliver a
balanced mix of growth and
yield to shareholders.
Solar projects partnership
Aramco entered into a
shareholders’ agreement with
PIF and ACWA Power Company
for the development of the Al
Shuaibah 1 and Al Shuaibah 2
photovoltaic solar projects
which are expected to have a
combined capacity of 2.66 GW
and an estimated cost of SAR 8.9
billion ($2.37 billion).
Rongsheng Petrochemical deal completed
Aramco completed its strategic acquisition of a 10%
interest in Rongsheng Petrochemical with a right to
supply 480 mbpd or 60% of the crude oil for a total
transaction value of SAR 12.8 billion ($3.4 billion).
Q3
Three blue ammonia shipments
Aramco delivered three
shipments of accredited blue
ammonia through its affiliates
ATC and SABIC Agri-Nutrients.
First unconventional gas production
Aramco successfully produced its first
unconventional tight gas from its South
Ghawar operational area.
Gas discoveries
Aramco discovered
two natural gas fields
in the Empty Quarter.
First entry into the Pakistani
fuels retail market
Aramco signed definitive
agreements to acquire a 40%
equity stake in Gas & Oil
Pakistan Limited.
Q4
Hadeed divestment
SABIC agreed to the sale of its 100%
shareholding in the Saudi Iron and
Steel Company (Hadeed) to PIF.
South America retail investment
Aramco agreed to purchase a
100% equity stake in the Chilean
retailer Esmax, representing
Aramco’s first downstream retail
investment in South America.
The transaction was completed in
March 2024.
Global Lighthouse Network status
The Yanbu’ Refinery becomes the fourth
Aramco facility to receive WEF Global
Lighthouse Network status.
International LNG investment
Aramco announced its first international
investment in LNG by signing definitive
agreements to acquire a strategic
minority stake in MidOcean Energy for
SAR 1.88 billion ($0.5 billion).
Gas compression projects onstream
Nine plants were placed onstream
completing the gas compression projects
at the Haradh and Hawiyah fields.
SAUDI ARAMCO | ANNUAL REPORT 2023
13
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
5. CORPORATE
GOVERNANCE
7. CONSOLIDATED
FINANCIAL
STATEMENTS
Business model
Capturing value across
the hydrocarbon chain
Low cost, lower-carbon intensity crude oil production
Low-cost upstream production with a lower upstream carbon intensity
than crude oil produced by other major producers, and operational
flexibility to rapidly increase crude oil production.
Upstream production is monetized through a high-quality external
customer base and captive downstream system.
Total hydrocarbon
production
(mmboed)
Total hydrocarbon
reserves1
Maximum
Sustainable Capacity
(billion boe)
(mmbpd)
251.2
Relationships
• Governments
Countries
of operations
SAR
$42
$27
Upstream carbon
intensity4
(kg of CO2e/boe)
Reliability7
54.4
Scope 2 emissions4
(mmtCO2e)
99.8
10.7
(%)
18.2
Scope 1 emissions4
(mmtCO2e)
SAR
89.90
Freshwater consumption4
(million cubic meters)
Net refining
capacity
(mmbpd)
4.1
Net chemicals
production capacity6
(million tons per year)
59.6
SAR
ON
TI
BU
RI
ST
DI
1. Hydrocarbon reserves of Saudi Arabian Oil Company (the Company) as at
December 31, 2023, under the Concession agreement.
2. Capital expenditures do not include external investments.
3. For definition of net cash and average capital employed, refer to
“Non-IFRS measures reconciliations and definitions”.
4. Refer to Section 3: Sustainability for further information.
5. Total liquids is comprised of crude oil, NGL, and condensate.
6. Excludes SABIC Agri-Nutrients and Metals (Hadeed) businesses.
7. Applies to Saudi Arabian Oil Company (the Company).
8. Includes income taxes, royalties, and dividends.
* Non-IFRS measure: refer to “Non-IFRS measures reconciliations and
definitions” for further information.
Integrated refining and petrochemical operations
Major integrated refiner and petrochemical
producer with a global network of reliable
assets in key regional markets and hubs.
Payments to the
Government8
(billion)
SAR
455
Kingdom-wide
infrastructure network
Kingdom-wide distribution
network includes pipelines,
bulk plants, air refueling sites,
and terminals that deliver
crude oil, NGL, natural gas,
and refined products.
367
New products
Development of products
like blue ammonia support
Aramco’s efforts to de-risk
its businesses and its
customer’s interest in
mitigating GHG emissions.
SAR
$121
High-growth markets
World-class partners and
customer base provide
access to high-growth
markets and material
demand centers.
(%)
$98
Lost time injuries /
illnesses rate4
(per 200,000 work hours)
15
Tier 1 process
safety events4
$199
380
$101
Return on average capital
employed (ROACE)*
Human
0.018
747
Free cash flow*
(billion)
Dividends paid
(billion)
&
73,311
SAUDI ARAMCO | ANNUAL REPORT 2023
• Nonmetallics
Net income
(billion)
$545
Company employees4
14
• Blue ammonia
• Refined products
Financial
NG
TI
KE
AR
M
2,043
• Electricity
• Condensate
65.0
NS
IO
AT
ER
OP
SAR
Average capital employed3
(billion)
• NGL
In-Kingdom Total Value
Add (iktva)4
(%)
M
EA
TR
NS
W
DO
Net cash3
(billion)
• Base oils and
lubricants
Relationships
&
103
Capital expenditures2
(billion)
• Gas
1.1
AM
RE
ST
UP
50+
• Chemicals
Power supplied to the
national grid
(gigawatts)
Financial
Human
New solutions
Robust technology program aims to
develop synthetic fuels, nonmetallics,
and crude-to-chemicals.
ED
AT
GR
TE
IN
• Suppliers
Domestic and foreign
subsidiaries, joint
arrangements, and
associates
SAR
10.7
Products produced
• Crude oil
Growing domestic market
Exclusive access to the
Kingdom’s large and
growing gas market.
• Partners
400+
Total liquids
production5
(mmbpd)
12.8
12.0
Stakeholders
• Customers
158
Integrated trading business
Integrated trading business
enables optimization of product
supplies to maximize returns.
High-quality gas reserves
Extensive, high-quality gas reserves and exclusive access to the
Kingdom’s large and growing domestic marketplace.
Inputs
Operations
Outcomes and impacts
Operations
22.5
Total recordable
case rate4
(per 200,000 work hours)
0.042
3
Fatalities4
SAUDI ARAMCO | ANNUAL REPORT 2023
15
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
Aramco’s operations
Global operations
Austria
Countries of operations – as at December 31, 2023
Subsidiary offices*
Terminals and distribution hubs
Refining, petrochemical and manufacturing facilities
Crude oil and natural gas production facilities
Aramco retail fuels network
Technology and innovation centers
Sweden
Germany
Denmark
Switzerland
* Subsidiaries are separate legal entities from the Company.
Estonia
Netherlands
Belgium
Saudi Arabia
Poland
Guernsey
Czech Republic
Hungary
Luxembourg
Spain
Bermuda
Mexico
Jawf
The Bahamas
Tunisia
Mauritania
Tanajib
Tabuk
Khursaniyah
Midyan
Duba
Fadhili
Marjan
Arabiyah
Wasit Karan
Berri Abu Safah
Ras Tanura
Jubail
Qa f Ju’aymah
Aramco headquaters, Dhahran
Khobar
Abqaiq
Ain Dar
Qasim
Shedgum
Al-Hasa
Hawtah
‘Uthmaniyah
Se’ed
Khurais
SABIC headquarters
Hawiyah
Riyadh
Haradh
Medina
Yanbu’
Rabigh
Curaçao
Hasbah
Manifa
Dammam
Saudi
Arabia
Bahrain
Thailand
India
Vietnam
United Arab Emirates
Kenya
Ecuador
Indonesia
The Independent
State of Samoa
Malaysia
Brazil
Singapore
Australia
Nuayyim
South Africa
Shaybah
Thuwal
Egypt
Liberia
Colombia
Saihat
Japan
Jordan
Oman
Zuluf
Safaniyah
Turkey
China
Morocco
Turaif
Greece
Italy
South Korea
Pakistan
Serbia
France
United States
of America
Russia
Finland
United Kingdom
Canada
New Zealand
Jiddah
Sulayyil
Argentina
Abha
Najran
Jazan
16
SAUDI ARAMCO | ANNUAL REPORT 2023
SAUDI ARAMCO | ANNUAL REPORT 2023
17
1. A
RAMCO OVERVIEW
AND STRATEGY
Business overview
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
5. CORPORATE
GOVERNANCE
4. RISK
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
Market overview
Overview
Aramco is one of the world’s largest integrated
energy and chemicals companies. Its operating
segments are Upstream and Downstream, which
are supported by corporate activities.
Integrated operations
Upstream
The Upstream segment’s activities consist of exploring
for, developing, and producing crude oil, condensate,
natural gas, and NGL. Aramco’s principal fields are
located in close proximity to each other within the
central region and Eastern Provinces of the Kingdom.
The crude oil, condensate, natural gas, and
NGL produced by the Upstream segment travel
through Aramco’s pipelines to multiple facilities for
processing into refined and petrochemical products,
or to domestic customers or export terminals. For
more information, see Section 2: Results and
performance – Upstream.
Downstream
The Downstream segment’s activities consist primarily
of refining and petrochemicals, base oils and
lubricants, retail, distribution, supply and trading,
and power generation. These support the Upstream
and Downstream businesses by enabling optimization
of crude oil sales and product placement through
Aramco’s significant infrastructure network of
pipelines and terminals, and to access shipping and
logistics resources.
Aramco’s downstream investments diversify its
revenue and integrate its oil and gas operations to
optimize value across the hydrocarbon chain,
supporting crude oil and gas demand and facilitating
the placement of its crude oil. Aramco also has an
integrated petrochemicals business within its
Downstream segment that produces basic chemicals,
such as aromatics, olefins, and polyolefins, as well as
more complex products such as polyols, isocyanates,
and synthetic rubber. For more information, see
Section 2: Results and performance – Downstream.
Corporate
Aramco’s Upstream and Downstream segments, as
well as the overall business, are supported by
corporate activities. These include technical services
essential to the success of Aramco’s core business, as
well as human resources, finance, legal, corporate
affairs, and IT. The corporate activities are also
supported by the integrated Strategy and Corporate
Development organization, which is mandated to
maximize value creation by efficiently optimizing
Aramco’s asset portfolio and seek growth
opportunities in line with corporate strategies.
For more information, see Section 2: Results and
performance – Corporate.
Global
In 2023, central banks around the world continued
with their policy of increasing interest rates to suppress
the significant inflation that persisted from the
economic recovery that took place in 2021 and 2022.
This led to a slower rate of growth in the global
economy, with GDP rising by an estimated 2.7%1 in
2023, compared to 3.1%1 in the previous year. It is
anticipated that the impact of previous interest rate
increases will continue to weaken global GDP growth
into 2024, with performance expected to reach a level
of 2.6%2.
In 2023, global oil demand is projected to have risen
by 1.9 mmbpd to 102.3 mmbpd3, while the global oil
supply is estimated to have averaged 103.0 mmbpd3.
This surplus in global supply has resulted in Brent
crude prices stabilizing in the low $80 range. The
average price for ICE Brent crude in 2023 was
$82.2 per barrel4.
Aramco’s corporate activities are underpinned by
its commitment to good governance and leadership,
which includes sustainability practices (Section 3:
Sustainability), risk management (Section 4: Risk),
and corporate governance (Section 5: Corporate
governance).
Global GDP growth1,6
(%, year-on-year)
2023
In 2023, the demand for energy within the Kingdom
is estimated to have increased by 1.2%. This rise in
domestic energy consumption was primarily fueled
by the transportation sector, which saw an estimated
growth of 5.9%. This sector’s growth was supported
by a robust private economic sector, strong activity
in construction, and the ongoing rebound of
international air travel.
Kingdom energy demand growth
(%, year-on-year)
(6.4)
2.7
6.0
2022
6.3
2021
(3.1)
2019
1.2
2023
3.1
2022
2020
Domestic
After experiencing robust economic expansion of
8.7%5 in 2022, the Kingdom’s GDP declined by an
estimated 0.9%5 in 2023. This modest decline is
attributed to reductions in oil production, which have
led the oil sector to shrink by an estimated 9.2%5.
However, a healthy 4.6%5 growth in non-oil activities
coupled with an estimated 2.1%5 rise in government
activities mitigated the effect of the oil sector decline
on overall GDP growth in 2023.
2020
2.6
1.7
2021
2019
(3.3)
0.1
Global oil demand and supply3,6
(mmbpd)
102.3
2023
103.0
100.4
2022
2021
2020
2019
101.2
98.3
96.5
92.2
95.0
101.6
101.5
Oil demand Oil supply
1. Oxford Economics.
2. Bloomberg.
3. S&P Global Crude Oil Markets Outlook.
4. Market View, Intercontinental Exchange (ICE).
5. General Authority for Statistics, Kingdom of Saudi Arabia.
6. Comparative figures have been adjusted to reflect actual data,
where applicable.
18
SAUDI ARAMCO | ANNUAL REPORT 2023
SAUDI ARAMCO | ANNUAL REPORT 2023
19
Positioning Aramco
for the future
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
Strategy
Aramco’s strategy is driven by its belief that reliable
and affordable energy supplies, including oil and gas,
will be required to meet the world’s growing energy
demand, and that new lower-carbon energy supplies
will gradually complement conventional sources.
Aramco continues to work to achieve further
reductions in greenhouse gas emissions from its oil and
gas operations. Aramco also invests in technologies
and solutions supporting the global energy and
materials transition towards a lower-carbon emissions
future. The world’s demand for affordable, reliable,
and more sustainable energy will continue to grow,
and Aramco believes it can best be met by a broad mix
of energy solutions.
Our strategic themes
As the principal engine of value
generation, Aramco intends to maintain its
position as the world’s largest crude oil
company by production volume and one
of the lowest-cost producers. The
Company’s vast reserves base, spare
capacity, and unique operational
flexibility allow it to effectively respond
to changes in demand.
Aramco’s strategy requires a number of
enablers to be successful, including:
Aramco has a dedicated system of
domestic and international wholly-owned
and affiliated refineries that are critical to
monetizing its upstream production.
Through continued strategic integration,
the Company captures additional value
across the hydrocarbon chain.
For more information see page 23
Lower-carbon initiatives
Localization and the
promotion of national
champions
For more information see page 24
20
Downstream integration
For more information see page 22
Aramco aims to lower the net carbon
emissions of its operations and support the
global energy transition through
development of a New Energies business
that includes renewable power generation
and lower-carbon products and solutions
across the energy, chemicals, and materials
sectors.
SAUDI ARAMCO | ANNUAL REPORT 2023
Aramco strives to provide reliable, affordable and
more sustainable energy to communities around the
world, and to deliver value to its shareholders
through business cycles by maintaining its
preeminence in oil and gas production and its
leading position in chemicals, aiming to capture
value across the energy value chain and profitably
growing its portfolio.
Our key enablers
To achieve its vision, Aramco focuses on four strategic
themes across its businesses:
Upstream preeminence
Within this context, Aramco’s vision is to be the
world’s preeminent integrated energy and chemicals
company, operating in a safe, sustainable and
reliable manner.
Aramco facilitates the development of a
diverse, more sustainable, and globally
competitive in-Kingdom energy
ecosystem to underpin the Company’s
competitiveness and support the
Kingdom’s economic development.
For more information see page 24
People
Aramco recognizes the need to prepare
its workforce of the future to ensure its
capabilities match its strategic requirements.
This includes advancing technical and
professional skills, developing commercial
and leadership competencies, supporting
the progress of localization, and focusing
on diversity and inclusion.
Technology
Aramco’s technology program aims to develop
new solutions for its Upstream and Downstream
businesses, help diversify its product portfolio,
grow its business sustainably, and achieve its
net-zero ambition.
The program also aims to enable Aramco to grow
its business competitively and sustainably in new
areas such as new energies, advanced materials,
and digital solutions.
How we deliver value
Aramco seeks to deliver value across
four dimensions:
Profitability
By reinforcing its competitive positions across its
upstream and downstream activities.
Resilience
Both operational and financial, enabling the
Company to declare dividends on a regular basis
with a view to building long-term shareholder value.
This includes providing sustainable dividend growth
through crude oil price cycles and maintaining a high
investment-grade credit rating.
Growth
Portfolio optimization
Aramco seeks to unlock value, enhance its
capital structure, and reallocate capital to higher
growth and return investments. Aramco has a
comprehensive and disciplined internal approval
process for capital expenditures, new projects,
and debt issuance.
For more information see page 25
Both in its traditional oil and gas activities and
new businesses.
Sustainability
As a core element of Aramco’s operational philosophy.
SAUDI ARAMCO | ANNUAL REPORT 2023
21
Four strategic themes
1. A
RAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
Strategy continued
Upstream preeminence
Oil
Aramco intends to maintain its position as the world’s
largest crude oil company by production volume. Its
reserves, operational capabilities, and spare capacity
allow it to increase production in response to demand.
Aramco expects global demand for crude oil will
continue to increase for many years to come. Aramco
believes that there is a need for industry-wide
investment to meet this demand, and that new oil
discoveries and developments will be needed to offset
the natural decline in production from currently
producing fields. The Company intends to continue to
invest in crude oil exploration and production through
oil price cycles in order to meet this expected global
demand growth, and believes that its low lifting costs,
low capital intensity and lower upstream carbon
intensity uniquely position it to benefit from these
investments and the continued pressure on the oil and
gas industry to reduce the environmental impact of the
industry’s operations.
The Company seeks to preserve its position as one of
the world’s lowest average upstream carbon intensive
crude oil producers. Aramco’s low per barrel gas
flaring rates, low depletion rate operational model,
and a focus on reducing the quantity of produced
water contribute to its lower average upstream carbon
intensity production. The Company is also pursuing a
wide range of initiatives to reduce its upstream carbon
intensity by at least 15% by 2035 compared to a 2018
baseline. Through reliable and lower carbon intensity
production, Aramco aims to support energy access and
security through the energy transition.
The Company balances production between maturing
areas and newer production sources, tapping into new
reservoirs when required to optimize the depletion rate
of its fields and maintain crude oil production.
Aramco’s low-cost position is a result of the unique
Strategy in action
+60%
Aramco plans to increase its gas production by more
than 60% by 2030 compared to 2021 production levels,
subject to domestic demand.
2021
22
SAUDI ARAMCO | ANNUAL REPORT 2023
2030
Downstream integration
nature of the Kingdom’s geological formations,
favorable onshore and shallow water offshore
environments in which its reservoirs are located,
synergies from Aramco’s use of its large infrastructure
and logistics networks, its low depletion rate
operational model, and its scaled application
of technology.
Aramco intends to continue the strategic integration
of its Upstream and Downstream businesses to
facilitate the placement of the Company’s crude oil in
larger offtake volumes through a dedicated system of
domestic and international wholly-owned and
affiliated refineries and petrochemical complexes,
allowing it to capture additional value across the
hydrocarbon chain, expand its sources of earnings,
and provide resilience to oil price and demand
volatility.
Aramco seeks to maintain its position as one of the
world’s most reliable crude oil suppliers. The Company
utilizes term agreements for selling crude oil to major
consumers globally, providing supply predictability to
customers by standardizing price and delivery terms to
major regional demand centers. Aramco continues to
invest in its sophisticated and extensive crude oil
distribution and dispatch system to maintain its
supply reliability.
Aramco’s 70% equity interest in SABIC supports the
significant expansion of its downstream activities,
particularly in its chemicals business, and provides
additional opportunities to supply mixed feedstock of
crude oil, refinery products and gas to manufacture
petrochemical products. Changing patterns of
demand, including growth in chemicals demand and
the long-term risk of decline in fuels demand, are
driving the Company’s strategy to favor investments
in facilities with high liquids-to-chemicals conversion
rates. Aramco aims to increase its liquids-to-chemicals
throughput to four million barrels per day by 2030.
The Government determines the Kingdom’s maximum
level of crude oil production in the exercise of its
sovereign prerogative and requires Aramco to maintain
an MSC in accordance with the Hydrocarbons Law. The
Government has directed Aramco to maintain crude oil
MSC at 12.0 mmbpd. The spare capacity afforded by
maintaining an MSC provides operational flexibility to
increase its production. While Aramco has a robust
field maintenance philosophy that emphasizes the
reliability of its upstream operations, the MSC provides
an alternative supply option in the event of unplanned
production outages.
Gas
Domestically, Aramco plans to further expand its
gas business, including the development of its
unconventional gas resources, increase its gas
production by more than 60% by 2030 compared to its
2021 production levels, subject to domestic demand,
and invest in additional infrastructure to meet the large
and growing domestic demand for lower-cost energy
and to reduce liquids-burning in power generation.
Domestic gas demand growth is driven by power
generation, water desalination, petrochemical
production, and other industrial consumption in
the Kingdom.
An important additional benefit of Aramco’s gas
production is the significant NGL and condensate yields,
which supplement crude oil production and provide
feedstock to the refining and petrochemical industries.
Internationally, Aramco anticipates strong demand-led
growth for LNG as the world continues on its energy
transition journey, with gas being a vital fuel and
feedstock in various industries, and critical to meeting
the world’s need for secure, accessible, and more
sustainable energy. As a result, Aramco plans to
develop an integrated global LNG business, and is
pursuing corresponding direct investment and joint
venture opportunities.
Geographically, Aramco intends to enhance both its
domestic and global Downstream businesses in key
high-growth geographies such as China, India, and
Southeast Asia, which are integral to its existing
business and future expansion strategy, as well as in
other attractive markets. Aramco also intends to
maintain its presence in key large countries, such as
the United States, and in countries that rely on
imported crude oil, such as Japan and South Korea.
Aramco continues to expand global recognition of its
brands. One aspect of this strategy is to introduce its
brands to existing domestic and international
marketing businesses, including at retail service
stations, and further develop its petrochemicals, base
oil and lubricants brands. As new marketing activities
are added to its business portfolio, Aramco intends to
use its own brands to build recognition of its position
in the global energy sector.
Strategy in action
Aramco’s dedicated system of domestic and international refineries
provide secure demand for upstream crude production.
Upstream crude oil production utilized
by Aramco’s downstream operations
38%
39%
43%
44%
47%
2023
2022
2021
2020
2019
UPSTREAM
DOWNSTREAM
SAUDI ARAMCO | ANNUAL REPORT 2023
23
1. A
RAMCO OVERVIEW
AND STRATEGY
Strategy continued
Lower-carbon initiatives
Aramco’s strategy for lower carbon intensity energy,
which seeks to address climate-related risks and
opportunities, aims to de-risk its businesses and
maintain competitiveness and differentiation in
carbon-constrained scenarios and, at the same time,
to build a material and profitable new business area
for the longer term.
The strategy has two main aspects. The first is to
lower the net carbon emissions of the Company’s
operations over time with the ambition to achieve
net-zero Scope 1 and Scope 2 greenhouse gas
emissions across wholly-owned operated assets
by 2050. The second is to develop and invest in
renewables power generation and lower-carbon
products and solutions across the energy, chemicals,
and materials industries.
Lowering the Company’s own net carbon emissions
requires managing, reducing, and balancing carbon
emissions across its operations through a number of
measures, including efficiency gains, renewable
power investment, carbon capture, utilization, and
storage, and multiple offset initiatives.
By developing and investing in renewable power
generation and lower-carbon products and solutions,
Aramco aims to both support its efforts to
decarbonize its own operations, while building a
material and profitable new business area for the
longer term. Through investments in lower-carbon
hydrogen and ammonia, lower-carbon fuels, and gas,
Aramco seeks to support emissions reductions in
hard-to-decarbonize sectors such as heavy-duty
transport and industrial applications, and develop
products to complement renewables in the domestic
energy mix. These initiatives are expected to help the
Company participate in the growing market for
lower-carbon products and solutions. Aramco is also
pursuing carbon capture and storage as a service
offering to third parties, and is seeking investments in
renewables that align with its other lower-carbon
initiatives. To support this strategy, the Company has
established a New Energies organization to group
together its low-carbon businesses, focused on
renewable power generation, lower-carbon
hydrogen, and carbon capture and storage (CCS).
The Company has ambitions to capture and store up
to 11 million tons of CO2 annually from Aramco
facilities, plus additional CO2 from other industrial
sources, by 2035, and invest in up to 12 gigawatts of
solar PV and wind projects by 2030.
Aramco aims to grow its business sustainably by
leveraging technology and innovation to lower its
climate impact. The Company intends to maintain its
position amongst the leaders in upstream carbon
intensity, with one of the lowest carbon emissions per
unit of hydrocarbons produced.
Strategy in action
11 million tons
Aramco has ambitions to capture and store up to
of CO2 annually from Aramco facilities, plus additional CO2
from other industrial sources, by 2035, and invest in up to
12 gigawatts of solar PV and wind projects by 2030.
Localization and national champions
In addition to Aramco’s core businesses, the Company
seeks to foster new businesses that will increase the
long-term reliability and competitiveness of the
Company’s ecosystem, as well as contributing to the
Kingdom’s economic development. This is key to
ensuring Aramco’s long-term cost and productivity
leadership, sustainability, and resilience.
Strategy in action
Aramco is helping to build a world class local supply chain
through its iktva program.
Percentage of total procurement expenditures locally sourced
1
55.8
57.5
59.0
63.0
65.0
2019
2020
2021
2022
2023
%
%
%
%
%
The objectives are two-fold: to localize the Company’s
supply chain, and promote national champions.
Aramco aims to strengthen its supply chain through
its localization efforts and utilizes the Kingdom’s
Shareek program, which provides a framework to
incentivize in-Kingdom investments. As part of this
strategy, Aramco seeks to increase the use of inKingdom suppliers of goods and services to 70.0%
through its in-Kingdom Total Value Add (iktva)
program.
Through its Namaat industrial investment program,
Aramco intends to drive continued growth and
development of a resilient and sustainable
domestic supply chain to strengthen and expand
the in-Kingdom private sector.
The Company’s Taleed program seeks to accelerate
the growth of small- and medium-enterprises
across multiple sectors in the sustainability, digital,
manufacturing, industrial, and social innovation
domains.
2. RESULTS AND
PERFORMANCE
Our key enablers
3. SUSTAINABILITY
4. RISK
5. CORPORATE
GOVERNANCE
6. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
7. CONSOLIDATED
FINANCIAL
STATEMENTS
People
Aramco recognizes the need to prepare its workforce of the future and seeks to ensure its
capabilities match its strategic requirements by:
• Advancing technical and professional skills, developing commercial and leadership competencies,
and supporting the progress of localization; and,
• Focusing on diversity and inclusion.
Technology
Aramco’s technology program aims to develop new solutions for its Upstream and Downstream
businesses, help diversify its product portfolio, and grow its business sustainably and achieve its
net-zero ambition. The program also aims to enable Aramco to grow its business competitively and
sustainably in new areas such as new energies, advanced materials, and digital solutions. Aramco
focuses its technology initiatives in upstream, downstream, and sustainability, and recognizes the
importance of embedding technology in its strategy and business culture.
Aramco has increased the venture capital (VC) funding available to Aramco Ventures by SAR 15.0 billion
($4.0 billion), making it one of the top corporate venture capital funds in the world and more than
doubling the total funding available to its VC programs to SAR 28.1 billion ($7.5 billion), including
Wa’ed Ventures. Half of this new funding will be invested in disruptive technologies outside the
energy sector, and half will be earmarked for late-stage, larger-ticket ventures in the sustainability and
digital domains.
Aramco intends to finance game-changing innovations across a variety of industries and to pave the
way for collaborations with innovative companies to develop new technologies that create long-term
diversification opportunities.
Examples of the new solutions that Aramco believes will positively impact its business sustainability,
and which are being actively pursued, include:
• Directly converting liquids to chemicals;
• Producing hydrogen from hydrocarbons while capturing and storing associated emissions;
• Expanding nonmetallic applications;
• Accelerating large-scale deployment of carbon capture, utilization, and storage;
• Enabling sustainable transport through more efficient engines and lower-carbon fuels; and,
• Accelerating technology-based offsetting solutions, such as direct air capture.
Portfolio optimization
Through portfolio optimization, Aramco seeks to unlock value, enhance its capital structure and
reallocate capital to higher growth and higher return investments. Aramco has a comprehensive and
disciplined internal approval process for capital expenditures, new projects, and debt issuance. The
Company analyzes future projects based on strategic, operational, commercial, and financial targets.
Aramco’s unique reserves and resource base, operational flexibility, field management practices, and
strong cash flow generation serve as a foundation for its low gearing and flexibility to allocate capital.
1. Applies to Saudi Arabian Oil Company (the Company).
24
SAUDI ARAMCO | ANNUAL REPORT 2023
SAUDI ARAMCO | ANNUAL REPORT 2023
25
2. R
esults and
performance
Key 2023 metrics …………………………………………………. 28
CFO’s message…………………………………………………….. 30
Financial performance…………………………………………. 32
Upstream…………………………………………………………….. 40
Downstream………………………………………………………… 48
Corporate……………………………………………………………. 60
Maintaining supplier reliability
Oil Supply Planning and Scheduling,
Dhahran, Saudi Arabia
Aramco’s 24-hour command center in its Dhahran
headquarters uses leading technology to track and
control all of its production.
Electronic screens across the center’s walls consolidate
thousands of real-time remote data points.
From the giant electronic viewing platform, Aramco
keeps a finger on the pulse of delivery to its local and
international customers.
26
SAUDI ARAMCO | ANNUAL REPORT 2023
SAUDI ARAMCO | ANNUAL REPORT 2023
27
1. ARAMCO OVERVIEW
AND STRATEGY
Key 2023 metrics
Net income
(billion)
EBIT*
(billion)
SAR
SAR
$121
2022: $161
538
865
$231
2022: $307
158
Net cash provided by operating activities
(billion)
Capital expenditures1
(billion)
SAR
SAR
$143
2022: $186
367
Dividends paid
(billion)
SAR
$98
2022: $75
1.87
Earnings per share
(basic and diluted)
SAR
$0.50
2022: $0.662
3. SUSTAINABILITY
4. RISK
4. CORPORATE
GOVERNANCE
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
6. CONSOLIDATED
FINANCIAL
STATEMENTS
Operational highlights
Financial highlights
455
2. RESULTS AND
PERFORMANCE
$42
2022: $38
1.55
Dividends paid per share
SAR
$0.41
2022: $0.35
380
Free cash flow*
(billion)
SAR
$101
2022: $149
22.5
ROACE*
(%)
2022: 31.6
(6.3)
Gearing*
(%)
2022: (7.9)
12.0
Total hydrocarbon production
(mmboed)
2022: 12.0
12.8
Total liquids production3
(mmbpd)
2022: 13.6
10.7
Net refining capacity
(mmbpd)
4.1
Net chemicals production capacity4
(million tons per year)
2022: 4.1
59.6
Reliability5
(%)
2022: 56.3
Upstream carbon intensity6
(kg of CO2e/boe)
Flaring intensity6
(scf/boe)
Total recordable case rate6
(per 200,000 work hours)
2022: 10.3
2022: 4.60
2022: 0.050
MSC
(mmbpd)
10.7
5.64
2022: 11.5
99.8
2022: 99.9
0.042
83.6
Average realized crude oil price
($/barrel)
2022: 100.2
Offshore installations
Arabian Gulf
1. Capital expenditures do not include external investments.
2. Earnings per share have been adjusted to reflect the effect of the bonus shares issuance.
* Non-IFRS measures: refer to “Non-IFRS measures reconciliations and definitions” for further details.
28
SAUDI ARAMCO | ANNUAL REPORT 2023
3. Total liquids is comprised of crude oil, NGL, and condensate.
4. Excludes SABIC Agri-Nutrients and Metals (Hadeed) businesses.
5. Applies to Saudi Arabian Oil Company (the Company).
6. Refer to Section 3: Sustainability for further information.
SAUDI ARAMCO | ANNUAL REPORT 2023
29
1. ARAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
4. CORPORATE
GOVERNANCE
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
6. CONSOLIDATED
FINANCIAL
STATEMENTS
CFO’s message
We also announced our intention to enter the global
liquefied natural gas (LNG) market for the first time
through the signing of definitive agreements to acquire
a strategic minority stake in MidOcean Energy. We
believe LNG is positioned for structural, long-term
growth and this investment would provide us an
opportunity to capitalize on rising LNG demand.
Additionally, we completed our purchase of a 100%
equity stake in Esmax, a leading diversified
downstream fuels and lubricants retailers in Chile.
This represents our first downstream retail investment
in South America and provides new market
opportunities, including fuel placement from
Motiva and an expanded market for our Valvolinebranded lubricants. We also signed definitive
agreements to acquire a 40% equity stake in Gas & Oil
Pakistan, one of the largest retail and storage
companies in Pakistan, marking our first entry into
the country’s fuels retail market.
We continued to demonstrate
our financial flexibility as we scaled
up the ongoing implementation
of the largest capital program in our
Company’s history.
Dear Shareholders,
In 2023, Aramco delivered robust financial results and
profitability despite ongoing inflationary pressures and
global economic uncertainty. Following our
remarkable performance in 2022, we are very proud to
have delivered our second-highest published annual
profits. For the year ended December 31, 2023, Aramco
delivered net income of SAR 454.8 billion ($121.3
billion) and free cash flow of SAR 379.5 billion ($101.2
billion). We also generated strong capital returns with
ROACE of 22.5%. Meanwhile, our gearing ratio of
(6.3)% remains strong at the end of 2023.
These results – alongside maintaining a strong balance
sheet as well as prudent cash and debt management
– enabled us to enhance our dividend distributions in
2023. In line with our commitment to deliver value to
shareholders, the Board has declared a fourth quarter
base dividend of SAR 76.1 billion ($20.3 billion), an
increase of 4.0% compared to the previous quarter,
and a performance-linked dividend distribution of
SAR 40.4 billion ($10.8 billion). Both dividends will be
paid in the first quarter of 2024.
Advancing our growth strategy
In 2023, we continued to demonstrate our financial
flexibility as we scaled up the ongoing implementation
of the largest capital program in our Company’s
history. Our capital expenditures in 2023 were
SAR 158.3 billion ($42.2 billion), representing an
increase of 12.1% from the previous year. We expect
30
SAUDI ARAMCO | ANNUAL REPORT 2023
our capital expenditures to continue to rise until the
middle of the decade as we deliver our crude oil
increment projects to maintain our MSC at 12.0 mmbpd
as directed by the Government, and continue to make
long-term investments across the hydrocarbon chain to
capture value from anticipated demand growth.
As our capital program progresses, we have advanced
our efforts to maintain a high investment-grade credit
rating and optimize our capital structure, which remain
fundamental to our financial strategy. As well, to
further deleverage our balance sheet, the Company
made two prepayments and a scheduled payment in
2023 to fully settle the deferred consideration related
to our SABIC acquisition. These payments resulted in
savings of SAR 10.5 billion ($2.8 billion) for Aramco.
In support of Aramco’s growth ambitions and
advancement of our liquids-to-chemicals strategy, we
completed the acquisitions of Valvoline Inc.’s global
products business and a 10% interest in Rongsheng
Petrochemical in China. The former complements
Aramco’s line of premium-branded lubricant products,
while the latter aligns with our goal to enhance our
Downstream business in high-growth geographies.
Alongside these investments, our acquisition of SABIC
in 2020 continues to support our downstream growth
and deliver value. We are targeting approximately
SAR 11.3 billion to SAR 15.0 billion ($3.0 billion to 4.0
billion) in annual recurring synergies by 2025.
In 2023 we made progress in our efforts to build
industry leadership positions in new energies,
including blue ammonia and renewables.
During the year we successfully delivered three
shipments of blue ammonia to customers in
SAR
bn
Asia, and we entered into a shareholders’
agreement to develop two photovoltaic solar
Total dividends paid in 2023
projects at Al Shuaibah. These actions
($97.8 billion)
demonstrate our desire to support an orderly
global energy transition and grow our business
sustainably through technology and innovation that
could reduce climate impacts.
366.7
performance-linked dividends totaling SAR 74.0 billion
($19.8 billion) in 2023. As a result, the total dividends
paid during the year were SAR 366.7 billion ($97.8
billion), which is 30.4% higher than the dividends paid
to shareholders in 2022.
Looking forward to the full-year results of 2024 and
onward, our intention is for any performance-linked
dividends to be in the amount of 50-70% of the
Group’s annual free cash flow. This will be net of the
base dividend and other amounts including external
investments, to be determined and announced with
the full-year results of each year and distributed over
the subsequent four quarters.
The Board of Directors’ recommendation to once again
issue bonus shares was approved at the Company’s
Extraordinary General Assembly meeting in May.
As a result, SAR 15.0 billion ($4.0 billion) of retained
earnings were capitalized to support the distribution
of one bonus share for every 10 shares held to eligible
shareholders. The Company’s share capital increased
by a corresponding amount to SAR 90.0 billion
($24.0 billion).
Investing for the future
In 2023 we made significant progress on delivering
our growth strategy by investing in our portfolio
while maintaining a strong balance sheet. We aim
to continue to provide stable energy supplies to
our customers as well as consistent and long-term
value creation for our shareholders. As ever, we will
take a disciplined approach as we invest in unique
opportunities that will underpin long-term cash flow
generation and sustainable growth.
Ziad T. Al Murshed
Executive Vice President & Chief Financial Officer
Maximizing shareholder value
Our focus on maximizing shareholder returns through
a balanced mix of growth and yield remains
unchanged. And our corresponding approach to
dividends is based on three main factors. First, we aim
to deliver a sustainable and progressive base dividend,
which provides downside resilience when necessary.
Second, we aim to share the upside with our
shareholders, which we expect to do through our
newly introduced performance-linked dividends.
Finally, we intend to continue to heavily reinvest in our
business through unique growth opportunities.
The positive impact of our dividend distribution
strategy was on full display in 2023. Our total base
dividends paid in 2023 of SAR 292.7 billion
($78.0 billion) were 4.0% higher than the dividends
paid in 2022. In addition, we also paid out
SAUDI ARAMCO | ANNUAL REPORT 2023
31
1. ARAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. RISK
4. CORPORATE
GOVERNANCE
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
6. CONSOLIDATED
FINANCIAL
STATEMENTS
Financial performance
Portfolio and funding optimization
In January 2023, Aramco received a payment of
SAR 15.6 billion ($4.2 billion) related to the financing
arrangement with the Jazan Integrated Gasification
and Power Company (JIGPC). This is the second of
three payments received by Aramco as a result of the
financing arrangement. The remaining amount to be
received under the financing arrangement as at
December 31, 2023 is SAR 2.0 billion ($0.5 billion).
With respect to the deferred consideration related to
the SABIC acquisition, the Company made total
payments in the amount of SAR 117.0 billion
($31.2 billion), in 2023 resulting in the full settlement
of the deferred consideration. These payments
resulted in a decrease in total borrowings and
cash and cash equivalents, and a net gain of
SAR 5.8 billion ($1.5 billion).
Delivering shareholder value
through resilient performance
Dhahran, Saudi Arabia
Aramco has consistently generated value for its
shareholders across crude oil price cycles.
The financial information of Aramco set forth below,
as at December 31, 2023 and 2022, and for the years
then ended, has been derived without material
adjustment from, and is qualified in its entirety by,
the financial statements contained in Section 7:
Consolidated financial statements. It should be read
in conjunction with the financial statements, Section
4: Risk, and other financial data included elsewhere in
this Annual Report.
Key factors affecting Aramco’s financial results
The following is a discussion of the most significant
factors that have impacted Aramco’s financial
position, results of operations, and cash flows for the
year ended December 31, 2023.
Supply, demand, and prices for hydrocarbons, and
refined and chemicals products
Aramco’s results of operations and cash flows are
primarily driven by market prices and volumes sold of
hydrocarbons, as well as refined and chemicals
products. International crude oil prices have
fluctuated significantly in the past and may remain
volatile. Fluctuations in the price at which Aramco is
able to sell crude oil could cause Aramco’s results of
operations and cash flow to vary significantly.
32
SAUDI ARAMCO | ANNUAL REPORT 2023
Crude oil is also a major component of the cost of
production of refined products and chemicals that
use hydrocarbons as a feedstock. However, because
prices for refined products and chemicals may not
timely adjust to reflect movements in crude oil prices,
such movements could, in the short-term, positively or
negatively impact margins for downstream products
that use crude oil as a feedstock. The prices for
refined products and chemicals are also impacted by
changes in supply and demand and economic cycles.
Ongoing economic uncertainty in 2023 resulted in
lower prices for hydrocarbons and lower refining
and chemicals margins, compared to the same period
in 2022.
The Government regulates the oil and gas industry
and sets the Kingdom’s maximum level of crude oil
production in the exercise of its sovereign
prerogative. Accordingly, the Government may in its
sole discretion increase or decrease the Kingdom’s
maximum hydrocarbon production levels at any time
based on its strategic energy security goals or for
any other reason. Therefore, Aramco’s results of
operations and cash flows may depend in part
on these sovereign decisions with respect to
production levels.
In relation to SABIC’s agreement to sell its 100%
shareholding in Hadeed to PIF, the assets and
liabilities of Hadeed were remeasured and classified
as held for sale as at September 30, 2023. As a result,
a loss on fair value measurement of SAR 3.2 billion
($0.85 billion) was recognized in the consolidated
statement of income.
Investments in affiliates and securities
In March 2023, Aramco completed its acquisition of
Valvoline Inc.’s global products business (VGP
Holdings LLC) for approximately SAR 10.34 billion
($2.76 billion), including customary adjustments. This
transaction resulted in Aramco recognizing assets
acquired and liabilities assumed at fair value in the
net amount of SAR 9.93 billion ($2.65 billion) and
goodwill of SAR 0.41 billion ($0.11 billion). Subsequent
to the acquisition, VGP Holdings LLC contributed
revenues of SAR 9.43 billion ($2.51 billion) and net
income of SAR 0.67 billion ($0.18 billion), which is
included in the consolidated statement of income.
With regard to Aramco’s acquisition of a 10% equity
interest in Rongsheng Petrochemical in July 2023,
Aramco recognized an equity investment at fair value
through other comprehensive income within
investments in securities of SAR 6.4 billion
($1.7 billion), and a non-current other asset of
SAR 5.9 billion ($1.6 billion) relating to a payment
made for a long-term sales agreement.
Government share transfer and
Bonus share distribution
On April 16, 2023, the Government announced it
has transferred 4% of the Company’s issued shares
to Sanabil Investments Company. In addition, on
March 7, 2024, the Government announced it had
transferred an additional 8% of the Company’s issued
shares to PIF’s wholly-owned companies. These
private transfers did not affect the Company’s total
number of issued shares and do not have any impact
on the Company’s operations, strategy, dividend
distribution policy, or governance framework. The
Government remains Aramco’s largest shareholder,
retaining an 82.19% direct shareholding.
On May 8, 2023, the Company’s Extraordinary
General Assembly approved the Board of Directors’
recommendation to increase the Company’s share
capital through capitalizing SAR 15.0 billion
($4.0 billion) of the Company’s retained earnings to
support the distribution of bonus shares to eligible
shareholders, in the amount of one share for every
10 shares held. This resulted in the increase of issued
ordinary shares from 220 billion to 242 billion
and a corresponding increase in share capital of
SAR 15.0 billion ($4.0 billion).
Shareholder returns
During 2023, the Company declared and paid base
dividend payments totaling SAR 292.7 billion
($78.0 billion). In addition to the base dividend, the
Company established a mechanism for performancelinked dividends to be paid in the amount of 50-70%
of the Group’s annual free cash flow, net of the base
dividend and other amounts including external
investments1. The first performance-linked dividends
were calculated based on the Group’s combined
full-year results of 2022 and 2023 and are intended to
be paid over six quarters. The first distribution of SAR
37.0 billion ($9.9 billion) was paid in the third-quarter
of 2023 based on the full-year results of 2022 and the
six-month results for the period ended June 30, 2023.
The second distribution of SAR 37.0 billion
($9.9 billion) was paid in the fourth quarter based on
the full-year results of 2022 and the nine-month
results for the period ended September 30, 2023,
resulting in a total payment of performance-linked
dividends of SAR 74.0 billion ($19.8 billion) in 2023.
These dividends payments resulted in a decrease in
cash and cash equivalents and a corresponding
reduction in shareholders’ equity in the consolidated
balance sheet.
1. For the purpose of calculating performance-linked dividends, external
investments include acquisition of affiliates, net of cash acquired,
additional investments in joint ventures and associates, and certain
amounts recognized in net investment in securities. Please see the
consolidated statement of cash flows for more information.
SAUDI ARAMCO | ANNUAL REPORT 2023
33
1. ARAMCO OVERVIEW
AND STRATEGY
Financial performance continued
All amounts in millions unless otherwise stated
Summarized consolidated statement of income
SAR
USD*
Year ended December 31
Year ended December 31
3. SUSTAINABILITY
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
4. CORPORATE
GOVERNANCE
4. RISK
Summarized consolidated balance sheet
All amounts in millions unless otherwise stated
6. CONSOLIDATED
FINANCIAL
STATEMENTS
All amounts in millions unless otherwise stated
SAR
USD*
As at December 31
As at December 31
2023
2022
2023
2022
% change
2023
2022
2023
2022
Revenue and other income related to sales
1,856,373
2,266,373
495,033
604,366
(18.1)%
Total assets
2,477,940
2,492,924
660,784
664,780
(0.6)%
Operating costs
Operating income
(988,086)
868,287
(1,122,296)
1,144,077
(263,489)
231,544
(299,279)
305,087
(12.0)%
(24.1)%
Total liabilities
740,848
826,777
197,559
220,474
(10.4)%
Income before income taxes and zakat
Income taxes and zakat
Net income
888,067
(433,303)
454,764
1,152,962
(548,957)
604,005
236,818
(115,547)
121,271
307,456
(146,388)
161,068
(23.0)%
(21.1)%
(24.7)%
(34.4)%
83.6
100.2
(16.6)%
22.5%
31.6%
(9.1) pp
All amounts in millions unless otherwise stated
Average realized crude oil price ($/bbl)
ROACE**
22.5%
31.6%
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
** Refer to “Non-IFRS measures reconciliations and definitions” for further details.
Financial results
Revenue and other income related to sales for the
year ended December 31, 2023, was SAR 1,856,373
($495,033), compared to SAR 2,266,373 ($604,366),
for the year ended December 31, 2022. The decrease
of 18.1% was primarily attributable to lower crude oil
prices and lower volumes sold, as well as lower
refining and chemicals products prices.
Operating costs decreased by SAR 134,210 ($35,790),
or 12.0%, from SAR 1,122,296 ($299,279) to SAR
988,086 ($263,489), for the years ended December 31,
2022 and 2023, respectively. This was principally due
to a decrease in production royalties resulting from a
lower average effective royalty rate, lower crude oil
prices and lower volumes sold. Operating costs also
decreased due to lower purchases of gas, refined and
chemical products partially offset by an increase in
crude oil purchases during the year.
Income vs. average realized crude prices
($ million)
$/barrel
120
350,000
83.6
250,000
200,000
105
100.2
300,000
90
75
70.5
64.6
60
150,000
40.6
45
100,000
30
50,000
15
0
2019
2020
Operating income Net income
34
2. RESULTS AND
PERFORMANCE
SAUDI ARAMCO | ANNUAL REPORT 2023
2021
2022
Average realized crude price
2023
0
Income before income taxes and zakat decreased
by SAR 264,895 ($70,638), or 23.0%, which mainly
reflects the impact of the lower crude oil prices
and lower volumes sold, weakening refining and
chemicals margins. This was partially offset by a
decrease in production royalties.
Income taxes and zakat for the year ended December
31, 2023, were SAR 433,303 ($115,547), compared
to SAR 548,957 ($146,388), in 2022. The decrease
was mainly driven by lower taxable income recorded
in 2023.
% change
Significant balance sheet movements:
Short-term investments
184,343
281,215
49,158
74,991
Property, plant and equipment
1,384,717
1,303,266
369,258
347,538
6.2%
Other assets and receivables (non-current and current)
82,012
63,472
21,870
16,926
29.2%
Cash and cash equivalents
198,973
226,047
53,059
60,279
(12.0)%
Inventories
85,951
100,528
22,920
26,808
(14.5)%
Assets classified as held for sale
15,424
–
4,113
–
Not applicable
Borrowings (non-current and current)
290,147
393,144
77,373
104,838
(26.2)%
Income taxes and zakat payable
82,539
104,978
22,010
27,995
(21.4)%
Deferred income tax liabilities
142,449
122,311
37,986
32,616
16.5%
Trade payables and other liabilities
151,553
135,390
40,414
36,104
11.9%
(7.9)%
(1.6) pp
Gearing**
(6.3)%
(7.9)%
(6.3)%
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
** Refer to “Non-IFRS measures reconciliations and definitions” for further details.
Financial position
Total assets were SAR 2,477,940 ($660,784) as at
December 31, 2023, compared to SAR 2,492,924
($664,780) as at December 31, 2022. The movement
was largely due to a decrease in short-term investments,
cash and cash equivalents and inventories. This was
partially offset by an increase in property, plant and
equipment and other assets and receivables.
comprise property, plant and equipment, intangible
assets, inventories, trade receivables, and other assets.
The decrease in short-term investments reflects the
maturities of USD denominated time deposits.
Total liabilities were SAR 740,848 ($197,559) at
December 31, 2023, compared to SAR 826,777
($220,474) as at December 31, 2022. The decrease
largely reflects the impact of reduction in borrowings
and income taxes and zakat payable, partially offset by
higher deferred income tax liabilities and trade and
other payables.
The increase in property, plant and equipment reflects
increased drilling and development activities related to
crude oil increments, and ongoing progress of multiple
gas projects toward the goal of expanding gas
production. This was partially offset by the
reclassification of Hadeed’s assets as held for sale.
The increase in other assets and receivables is mainly
due to the recognition of the long-term sales agreement
associated with the Rongsheng Petrochemical
acquisition and higher other long-term receivables and
advances outstanding at year-end.
The lower cash and cash equivalents balance is primarily
due to lower earnings during the year and higher cash
paid for dividend distributions. This was partially offset
by lower cash paid for settlement of income, zakat and
other taxes, and cash inflows from maturities of
short-term investments.
The change in assets classified as held for sale is due to
reclassification of major classes of Hadeed’s assets that
The lower inventories balance is principally due to a
decrease in crude oil, refined and chemical product
inventories compared to the prior year, which is
predominantly associated with lower product prices at
year end and a reduction in materials and supplies
inventories compared to the prior year.
The reduction in borrowings was predominately driven
by the payment of the deferred consideration related
to the SABIC acquisition, which was fully settled during
the year.
Income taxes and zakat payable decreased due to the
impact of lower taxable income during the year.
The increase in deferred income tax liabilities is mainly
driven by changes in taxable temporary differences
associated with property, plant and equipment, and
provisions and other liabilities.
Trade payables and other liabilities increased primarily
as a result of higher purchases and other accrued
materials and services outstanding at year-end.
SAUDI ARAMCO | ANNUAL REPORT 2023
35
1. ARAMCO OVERVIEW
AND STRATEGY
Financial performance continued
All amounts in millions unless otherwise stated
Summarized consolidated statement of cash flows
SAR
USD*
Year ended December 31
Year ended December 31
All amounts in millions unless otherwise stated
2023
2022
2023
2022
% change
3. SUSTAINABILITY
537,814
698,152
143,417
186,174
(23.0)%
All amounts in millions unless otherwise stated
(54,019)
(389,009)
(14,405)
(103,736)
(86.1)%
Net income
Net cash used in financing activities
(510,869)
(382,675)
(136,232)
(102,047)
33.5%
Finance costs, net of income taxes and zakat
Cash and cash equivalents at end of the year
198,973
226,047
53,059
60,279
(12.0)%
Net income before finance costs, net of income taxes and zakat
Capital expenditures
(158,308)
(141,161)
(42,215)
(37,643)
12.1%
Free cash flow**
379,506
556,991
101,202
148,531
(31.9)%
Cash flows
Net cash provided by operating activities was
SAR 537,814 ($143,417) for the year ended December
31, 2023, compared to SAR 698,152 ($186,174) reported
in 2022. The decrease of SAR 160,338 ($42,757) mainly
reflects lower earnings resulting from lower crude oil
prices and lower volumes sold, and weakening refining
and chemicals margins. This was partially offset by
favorable movements in working capital and a
decrease in cash paid for the settlement of income,
zakat and other taxes.
Net cash used in investing activities was SAR 54,019
($14,405) for the year ended December 31, 2023,
compared to SAR 389,009 ($103,736) in 2022, resulting
in a change of SAR 334,990 ($89,331). This was
primarily due to net cash inflow from maturities of
short-term investments compared to a net outflow in
2022, partially offset by cash consideration paid for the
Valvoline Inc. global products business acquisition and
higher upstream capital expenditures.
Net cash used in financing activities was SAR 510,869
($136,232) in 2023, compared to SAR 382,675
($102,047) in 2022. The increase in financing-related
cash outflows of SAR 128,194 ($34,185) predominately
reflects payments associated with the performancelinked dividends, an increase of 4.0% in base
dividends, and an absence of cash received in
connection with Aramco’s gas pipeline transaction in
the prior year. This was partially offset by an increase
in cash proceeds from borrowings.
SAUDI ARAMCO | ANNUAL REPORT 2023
Non-IFRS measures
reconciliations and
definitions
This Annual Report includes certain non-IFRS financial
measures (ROACE, free cash flow, EBIT, and gearing)
which Aramco uses to make informed decisions about
its financial position, operating performance or
liquidity. These non-IFRS financial measures have been
included in this Report to facilitate a better
understanding of Aramco’s historical trends of
operation and financial position.
Aramco uses non-IFRS financial measures as
supplementary information to its IFRS-based operating
performance and financial position. The non-IFRS
financial measures are not defined by, or presented in
accordance with, IFRS. The non-IFRS financial measures
are not measurements of Aramco’s operating
performance or liquidity under IFRS and should not be
used instead of, or considered as alternatives to, any
measures of performance or liquidity under IFRS. The
non-IFRS financial measures relate to the reporting
periods described in this Annual Report and are not
intended to be predictive of future results. In addition,
other companies, including those in Aramco’s industry,
may calculate similarly titled non-IFRS financial
measures differently from Aramco. Because companies
do not necessarily calculate these non-IFRS financial
measures in the same manner, Aramco’s presentation
of such non-IFRS financial measures may not be
comparable to other similarly titled non-IFRS financial
measures used by other companies. As such, these
measures should be read and interpreted in
conjunction with the financial statements and other
financial data included elsewhere in this Report.
4. RISK
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
6. CONSOLIDATED
FINANCIAL
STATEMENTS
Return on average capital employed (ROACE)
Net cash used in investing activities
** Refer to “Non-IFRS measures reconciliations and definitions” for further details.
4. CORPORATE
GOVERNANCE
All amounts in millions unless otherwise stated
Net cash provided by operating activities
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
36
2. RESULTS AND
PERFORMANCE
SAR
USD*
Twelve months
ended December 31
Twelve months
ended December 31
2023
2022
2023
2022
454,764
604,005
121,271
161,068
4,093
4,441
1,092
1,185
458,857
608,446
122,363
162,253
Non-current borrowings
318,380
436,371
84,901
116,366
Current borrowings
74,764
74,550
19,937
19,880
Total equity
1,666,147
1,280,668
444,306
341,512
Capital employed
2,059,291
1,791,589
549,144
477,758
Non-current borrowings
226,481
318,380
60,395
84,901
Current borrowings
63,666
74,764
16,978
19,937
Total equity
1,737,092
1,666,147
463,225
444,306
Capital employed
2,027,239
2,059,291
540,598
549,144
Average capital employed
2,043,265
1,925,440
544,871
513,451
22.5%
31.6%
22.5%
31.6%
As at period start:
As at period end:
ROACE
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
ROACE measures the efficiency of Aramco’s
utilization of capital. Aramco defines ROACE as net
income before finance costs, net of income taxes
and zakat, as a percentage of average capital
employed, calculated on a 12-month rolling basis.
Average capital employed is the average of total
borrowings plus total equity at the beginning and
end of the applicable period. Aramco utilizes
ROACE to evaluate management’s performance and
demonstrate to its shareholders that capital has
been used effectively.
ROACE for the year ended December 31, 2023, was
22.5%, compared to 31.6% in 2022. The decrease in
ROACE, calculated on a 12-month rolling basis, was
primarily attributable to lower earnings largely
reflecting the decline in crude oil prices and lower
volumes sold, weakening refining and chemicals
margins, and higher average capital employed.
ROACE
(%)
22.5
2023
31.6
2022
24.4
2021
2020
2019
13.2
28.4
SAUDI ARAMCO | ANNUAL REPORT 2023
37
1. ARAMCO OVERVIEW
AND STRATEGY
Financial performance continued
All amounts in millions unless otherwise stated
Free cash flow
SAR
USD*
Year ended December 31
All amounts in millions unless otherwise stated
2023
Year ended December 31
2022
2023
2022
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. CORPORATE
GOVERNANCE
4. RISK
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
6. CONSOLIDATED
FINANCIAL
STATEMENTS
All amounts in millions unless otherwise stated
Gearing
All amounts in millions unless otherwise stated
Total borrowings (current and non-current)
SAR
USD*
As at December 31
As at December 31
2023
2022
2023
2022
290,147
393,144
77,373
104,838
Net cash provided by operating activities
537,814
698,152
143,417
186,174
Cash and cash equivalents
(198,973)
(226,047)
(53,059)
(60,279)
Capital expenditures
(158,308)
(141,161)
(42,215)
(37,643)
Short-term investments
(184,343)
(281,215)
(49,158)
(74,991)
Free cash flow
379,506
556,991
101,202
148,531
(9,584)
(8,565)
(2,556)
(2,282)
–
–
–
–
(102,753)
(122,683)
(27,400)
(32,714)
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
Aramco uses free cash flow to evaluate its cash
available for financing activities, including dividend
payments. Aramco defines free cash flow as net
cash provided by operating activities less capital
expenditures.
Non-current cash investments
Free cash flow in 2023 was SAR 379,506 ($101,202),
compared to SAR 556,991 ($148,531), in 2022, a
decrease of SAR 177,485 ($47,329) or 31.9%. This was
mainly due to lower operating cash flows primarily
resulting from lower earnings and higher upstream
capital expenditures, partially offset by favorable
movements in working capital, and a reduction in cash
paid for the settlement of income, zakat and other taxes.
Free cash flow
($ million)
Net cash
Total equity
1,737,092
1,666,147
463,225
444,306
Total equity and net cash
1,634,339
1,543,464
435,825
411,592
(6.3)%
(7.9)%
(6.3)%
(7.9)%
Gearing
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
1. As at December 31, 2023, investments in debt securities (current and non-current) are comprised of SAR 1,249 ($333) and SAR 8,335 ($2,223) which form part of other assets and
receivables under current assets, and investments in securities under non-current assets, respectively. As at December 31, 2022, investments in debt securities (current and non-current)
are comprised of SAR 906 ($240) and SAR 7,659 ($2,042) which form part of other assets and receivables under current assets, and investments in securities under non-current assets,
respectively.
101,202
2023
Gearing is a measure of the degree to which Aramco’s
operations are financed by debt and reflects available
liquidity held in current and non-current investments
and cash management instruments. Aramco defines
gearing as the ratio of net (cash) / debt (total
borrowings less cash and cash equivalents, short-term
investments, investments in debt securities (current
and non-current), and non-current cash investments)
to total equity and net (cash) / debt. Management
believes that gearing is widely used by analysts and
investors in the oil and gas industry to indicate a
company’s financial health and flexibility.
148,531
2022
107,455
2021
2020
Investments in debt securities (current and non-current)1
49,137
78,305
2019
Earnings before interest, income taxes and zakat (EBIT)
All amounts in millions unless otherwise stated
SAR
USD*
Year ended December 31
Year ended December 31
2023
2022
2023
2022
Net income
454,764
604,005
121,271
161,068
Finance income
(31,216)
(12,425)
(8,324)
(3,313)
Gearing2
(%)
Finance costs
8,186
8,882
2,183
2,369
2023
(6.3)
Income taxes and zakat
433,303
548,957
115,547
146,388
2022
(7.9)
Earnings before interest, income taxes and zakat
865,037
1,149,419
230,677
306,512
2021
2019
Aramco defines EBIT as net income plus finance costs
and income taxes and zakat, less finance income.
Aramco believes EBIT provides useful information
regarding its financial performance to analysts and
investors.
12.0
22.2
2020
* Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.
EBIT for 2023 was SAR 865,037 ($230,677) compared
to SAR 1,149,419 ($306,512), in 2022. This decrease of
SAR 284,382 ($75,835) or 24.7%, principally represents
the impact of lower crude oil prices and lower volumes
sold, and weakening refining and chemicals margins,
partially offset by a decrease in production royalties
during the year.
Aramco’s gearing ratio was (6.3)% as at December 31,
2023, compared to (7.9)% as at December, 2022. The
increase in gearing reflects the impact of lower net
(cash) position and higher total equity. The decrease
in net (cash) was largely due to a decrease in shortterm investments and cash and cash equivalents,
partially offset by a reduction in total borrowings.
(5.2)
2. Comparative ratios for the years 2021, 2020, and 2019 have been amended to reflect Aramco’s
revised gearing definition.
EBIT
($ million)
230,677
2023
208,046
2021
2020
101,391
2019
38
[•]
306,512
2022
SAUDI ARAMCO | ANNUAL REPORT 2023
177,929
SAUDI ARAMCO | ANNUAL REPORT 2023
39
1. ARAMCO OVERVIEW
AND STRATEGY
2. RESULTS AND
PERFORMANCE
3. SUSTAINABILITY
4. CORPORATE
GOVERNANCE
4. RISK
5. ADDITIONAL
FINANCIAL
AND LEGAL
INFORMATION
6. CONSOLIDATED
FINANCIAL
STATEMENTS
Upstream
Upstream
competitive strengths
Newly-installed wellhead platform
Arabian Gulf
Khurais Oil Train-4
Saudi Arabia
Unrivaled scale
One of the world’s largest
producers of crude oil and
condensate, with a vast
reserves base.
Unique operational
flexibility
Spare capacity created by
maintaining an MSC provides
operational flexibility to
rapidly increase crude
oil production.
Multiple crude grades
Long reserves life
Ability to produce a range
of crude grades that are
highly compatible with
most refineries globally
and delivered through an
established network of
access points to the global
marketplace.
Strong track record
of low-cost reserve
replacement, leveraging
cutting-edge reservoir
stimulation technologies
and proven exploration
success.
High-quality
gas reserves
12.8
251.2
billion boe
Hydrocarbon reserves
under the Concession
agreement as at December
31, 2023
SAUDI ARAMCO | ANNUAL REPORT 2023
Low upstream
carbon intensity
Effective reservoir
management, a low depletion
rate operational model, and a
focus on energy efficiency
reduce the Company’s
upstream carbon intensity
associated with production of
oil, which is one of the lowest
among major producers.
12.0
mmbpd
MSC as at December 31, 2023
5
grades
Arabian crude oil produced
207.5
tscf
Natural gas reserves under
the Concession agreement as
at December 31, 2023
L…
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