Saudi contract awards surge to highest in four years

Saudi Aramco continued awarding projects to international contractors at its Marjan oil field. (Getty Images)
Updated 11 September 2019

Saudi contract awards surge to highest in four years

  • The contract tally reached SR64.3 billion during the second quarter — up 32 percent on the previous quarter and an increase of 92 percent on a year earlier
  • The oil and gas sector overwhelmingly dominated the contracts awarded in the second quarter, accounting for almost three-quarters of the total

LONDON: The value of contracts awarded in Saudi Arabia almost doubled in the second quarter compared to a year earlier, led by the energy, property and military sectors, according to a report published on Tuesday.
The contract tally reached SR64.3 billion ($17.2 billion) during the period — up 32 percent on the previous quarter and an increase of 92 percent on a year earlier, the US-Saudi Arabian Business Council (USABC) said in its report.
It represents the highest value of contracts awarded by quarter in four years with more awards made in the first half of this year than the whole of 2018.
“This highlights the resurgence in 2019, which is on pace to match the construction boom witnessed prior to the brief economic downturn,” USABC said.
The collapse of oil prices in 2014 led to billions of dollars worth of projects being placed on hold throughout the Gulf, but business activity in Saudi Arabia, the region’s largest economy has started to accelerate.
While a majority of the contracts were awarded by the government, the private sector was an active participant in the real estate sector in particular, USABC noted.
The oil and gas sector overwhelmingly dominated the contracts awarded in the period, accounting for almost three-quarters of the total.
Saudi Aramco continued awarding projects to international contractors at its Marjan oil field as well as the Tanajib oil complex in the Eastern Province, the council said.
For the second consecutive quarter, the Eastern Province contributed the largest share of awarded contracts by region.
The order pipeline for the rest of the year also looks set to continue the strong momentum, led by Aramco’s Marjan and Berri field projects as well as the first phase of the Red Sea Tourism Project.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 09 August 2020

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.