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Saudi Aramco has reported a sharp drop in profits after the energy giant cut production and oil prices fell sharply in 2023.

Profits fell 25% to $121 billion (£91 billion) after a record year in 2022.

But this figure is still the second-highest profit ever for the state-backed company.

The company said it was increasing its payments to shareholders and looking for opportunities to invest in China.

Dividends will rise to $98 billion, an increase of almost a third compared to 2022, when the country posted a record profit of $161 billion, thanks to the impact Russia’s war in Ukraine had on energy prices. Oil prices reached $130 per barrel in 2022.

The Saudi state owns almost 95% of the company, so the huge profits resulted in a budget surplus for the kingdom in 2022.

In 2023, the oil price fell back to $85 per barrel. In addition, Saudi Aramco has cut production to support oil prices, further testing profits.

“In 2023 we achieved our second highest net result ever. Our resilience and agility have contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds,” Aramco CEO Amin Nasser said in a statement.

Saudi Arabia aims to diversify the country’s economy and is using revenues from the energy sector to finance the transition.

Mr Nasser said the company will make some announcements this year about renewable energy investments in Saudi Arabia.

But he also said the oil giant was looking for opportunities to invest in China, where demand for oil was growing.

“So far we are in early 2024, demand is healthy and growing in China,” Nasser told journalists.

Saudi Aramco already has investments in Chinese refineries.

He said he expects the oil market to be “fairly robust” in 2024, with demand slightly higher than last year.

He also said discussions are taking place about an interest in working with French carmaker Renault and China’s Geely, which make hybrid car engines.

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