Aramco More Resilient to Crude Price Fall Than Rivals

Saudi Aramco is more resilient to oil price slumps than its biggest listed rivals, its 2016 accounts indicate, giving a rare insight into the state energy giant’s finances ahead of a proposed flotation.

The full-year accounts, not publicly available but seen by Reuters, show Aramco’s net income fell by about 21% to $13.3 billion in 2016—when oil prices collapsed to a 12-year low of $27.10 a barrel due to a global glut of crude.

By comparison, the net income of Exxon Mobil Corp, the world’s largest listed oil company, dropped 51% in 2016, while the earnings attributable to shareholders of Royal Dutch Shell, the No.2 listed oil firm, fell 37%, excluding items.

Saudi Aramco said in response to a request for comment: “Saudi Aramco does not comment on speculation regarding its financial performance and fiscal regime.”

Industry experts say Aramco’s ability to better weather price shocks is down to low production costs, the fact its major operations are concentrated in just one country and because it has fewer employees than its biggest rivals even though it is the world’s largest oil producer. Analysts estimate the Saudi giant’s production costs to be below $1 per barrel compared to $10 per barrel in places like Russia and as much as $20-30 per barrel in locations like North Sea. The accounts show 67,718 people worked for Aramco in 2016, compared with 71,100 at Exxon and 89,000 at Shell.

Aramco produces around 10 million barrels per day of oil compared with Exxon’s and Shell’s oil equivalent of 4 million bpd and 3.7 million bpd respectively.