MEOG: Aramco’s results and Iraq’s budget

Finance took centre stage in the Middle East this week as Saudi Aramco announced its 2020 results and Iraq’s parliament postponed a vote on the country’s budget by a week.

Aramco’s results made for fascinating reading, with the company posting massive profits despite a $39bn reduction in net income on the back of the coronavirus (COVID-19) pandemic. Impressively, having fulfilled its $75bn dividend obligation it ended the year with more cash in the bank than it started with.

Its performance was dented by a 700,000 bpd drop in crude oil production, while realised oil prices were also significantly lower compared to a year earlier. Aramco also postponed or cancelled work on several high-profile projects designed to maintain and expand production capabilities. Bidding for these will once again come into view as the company moves to increase maximum sustainable capacity by 1mn bpd by 2025 following direction from the Ministry of Energy.

In Iraq, a final vote on the 2021 draft budget agreed in December was postponed as factions could not come to an understanding on the language to be used in the article pertaining to the share of the budget to be allocated to the Kurdistan Region. Previous budgets have put this at 12.67%, though this has been contingent on the regional government transferring 250,000 bpd of crude to Baghdad’s state oil marketer SOMO, and Sunni and Shia groups are believed to be lobbying for the inclusion of non-oil revenues as a prerequisite for the allocation of funds.