Saudi Arabia’s state-owned oil giant Aramco boosted its dividend despite net profit falling 24.7% to $121.3 billion in 2023 on lower oil prices and volumes, showing the state’s continued reliance on oil revenue as it seeks to diversify.

The profit, down from $161.1 billion in 2022, was still the company’s second-highest on record, Aramco said on Sunday as it reported total dividends for the year of $97.8 billion, up 30%. Oil revenues made up 62% of total state revenues last year.

The Saudi government, which directly holds about 82.2% of Aramco, relies heavily on the oil giant’s generous payouts, which also include royalties and taxes. The world’s top oil exporter is spending billions of dollars trying to diversify its economy and find alternative sources of wealth having relied on oil for decades.

“Our balance sheet remains strong, even after our significant growth programme and dividend payouts,” Chief Executive Amin Nasser said.

Nasser expects global oil demand for 2024 at 104 million barrels a day, up from an average of 102.4 million barrels in 2023.

The state’s ambitious economic agenda, known as Vision 2030, is spearheaded by the sovereign Public Investment Fund, which owns 16% of Aramco, after a fresh transfer by the government of 8% to companies PIF owns last week.

Aramco declared a base dividend, paid regardless of results, of $20.3 billion for the fourth quarter. It expects to pay out $43.1 billion in performance-linked dividends this year, including $10.8 billion to be paid out in the first quarter.

The base dividend was increased 4% year on year, and the performance-linked dividend was about 9% higher.

The company said capital investments were at $49.7 billion in 2023, up from $38.8 billion in 2022. It forecast capital investments between $48 billion and $58 billion this year, growing until the middle of the decade.

That range is wide because for external investments, “there’s an element of timing that we don’t fully control,” Chief Financial Officer Ziad Al-Murshed said on a media call.

The Saudi government in late January ordered Aramco to scrap its expansion plan to boost production capacity to 13 million barrels a day (mbpd), returning to the previous 12 mbpd target.

The capacity decision “is expected to reduce capital investment by approximately $40 billion between 2024 and 2028,” Aramco said.

Most of the savings are expected in the latter years, so how it will be spent will be decided as opportunities arise, Al-Murshed said. Priorities for using the extra cash include sustaining capex, the base dividend, growth capex, additional distributions and further deleveraging, he added.

Free cash flow fell to $101.2 billion in 2023 from $148.5 billion in 2022.

Upstream investments including gas will be almost 60% of capex in 2024-2026, including external investments, Chief Executive Amin Nasser said. Downstream will be around 30% and “new energies” around 10%.

Also, read this

Pakistan signs long-term agreement for Russian oil

Crude oil prices may remain low in early 2024, say analysts

Explained: Secretive mechanism behind Pakistan’s petrol prices

“As we go beyond that, over the next 10 years, upstream will be around 50%, downstream is around 35% and new energies around 15%,” Nasser said.

Investing in gas will help free up more oil for export, as well as produce more liquids associated with gas extraction, he said.

Aramco’s shares were up about 1.7% to 32.3 riyals a share, slightly above their 2019 IPO price of 32 riyals. Sources told Reuters last month that Saudi Arabia is poised to sell more shares of Aramco.

“That’s a question for the government,” Al-Murshed said on whether more government-owned shares would be sold.