MOSCOW (MRC) -- Saudi Aramco's net income fell in the first quarter on the back of lower crude oil prices and production volumes, coupled with declining refining and chemical margins, said the company.
"The first quarter of 2020 was impacted by declining global crude oil demand resulting from Covid-19 and its impact on worldwide economic activity. This led to lower crude oil prices and continued pressure on refining and chemicals margins," the company said in a statement.
Downstream earnings before interest and taxes (EBIT) fell in the first quarter, primarily due to inventory re-measurement losses as a result of lower crude and refined product prices.
The company's downstream EBIT swung to a loss of Saudi riyal (SR) 19bn in the first quarter, compared with a profit of SR5.12bn in the same period last year.
Refining and chemicals margins were weakened by slower global economic growth caused by the global impact of the coronavirus pandemic.
As MRC wrote before, Saudi Aramco’s plan to buy USD15-billion stake in Reliance Industries hydrocarbon business may not go through due to the rising risk of collapsing oil prices, US-based brokerage Bernstein has warned.
Apart from Reliances oil to chemicals business, Aramco also agreed last year to buy the controlling stake in SABIC from the kingdom’s wealth fund for USD69.1bn, sealing one of the biggest-ever deals in the global chemical industry.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
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