RIYADH, Aug. 13 (YPA) – Aramco, the state-owned Saudi oil giant is planning to cut its capital spending (money used to acquire assets, development and maintenance) to between $ 20 and $ 25 billion this year in order to pay dividends of $ 75 billion it pledged to investors during its initial public offering, last year.
The British newspaper “Financial Times” on Wednesday quoted informed sources as saying “The new level of capital spending is largely dedicated to exploration and production and will not change over the next three years, and is expected to continue in 2021, 2022 and 2023 if oil prices remain at current levels.”
Spending has seen wide cuts to maintain liquidity at a time when the oil industry is grappling with the repercussions of lower crude prices, which may become a new normal situation for a long time after the Corona virus pandemic that struck demand.
On Sunday, Aramco said it expects capital spending for 2020 to be at the lower end of the original range amounting between $ 25 to $ 30 billion, as the state-owned company reported a 73% drop in second-quarter profit.
“Aramco, like any other oil company, faces budgetary pressures, but the Saudi government depends on its cash flow,” said Jefferies analyst Jason Gamel.
Riyadh relies on oil sales for 64% of its revenues, and it has admitted that it faces a severe crisis after oil prices plunged from $ 70 a barrel in January to $ 20 in April.