Fitch revises Saudi Aramco’s outlook to positive from stable

Fitch revises Saudi Aramco’s outlook to positive from stable

Fitch Ratings has revised the outlook on the world's largest oil producer, Saudi Aramco, to positive from stable, following a similar rating action on Saudi Arabia and has affirmed the Long-Term Foreign & Local Currency Issuer Default Ratings (IDR) at 'A'.

According to the ratings agency, Aramco’s financial profile benefits from strong pre-dividend free cash flow (FCF) generation and conservative leverage. Its business profile is characterised by large scale production, vast reserves, low output costs and expansion into downstream and petrochemicals. Its upstream operations focus on a single country and, compared with global oil and gas majors, its operations are skewed towards crude oil production.

"We project that given high oil prices Saudi Aramco could switch back to the net cash position in the next two years and will remain less leveraged than its maininternational peers, such as Royal Dutch Shell plc, TotalEnergies SE," Fitch noted.

Capex

Saudi Aramco's annual capex is set to increase to 40 billion-50 billion in 2022, versus 32 billion in 2021, on the back of its efforts to increase oil production capacity by 1 million barrels of oil a day (MMbpd) to 13MMbpd by 2027 as well as other strategic initiatives, including gas production, liquids to chemicals production, and