Hello, and welcome to this audio webcast discussing Saudi Aramco's Full Year 2024 Results. I'm Peter Hutton, Head of Investor Relations at Aramco, and I'm pleased to be joined today by Mr. Amin Nasser, President and CEO, and Mr. Ziad Al-Murshed, Executive Vice President and CFO. Today's webcast will include a question-and-answer session, and the entire call is expected to last about an hour. The webcast and conference call are being recorded, and I'd like to draw your attention to this cautionary statement on forward-looking information. With that, I will now hand over the call to Amin.
Thank you, Peter. Hello everyone, and thank you for joining us today. Aramco had a strong performance in 2024, both financially and operationally. We continue to deliver on our projects and promises, providing predictability to our shareholders and reliability for our customers while being ready to capture opportunities. The combination of our track record, our competitive advantages, and our focus on delivering shareholder value gives us confidence that we can and will thrive in any environment. Let me now walk you through our advantages and growth opportunities in more detail.
One key advantage is our people and their deep commitment to creating value by delivering the reliable energy needed both now and in the future. Our net income for the full year was $106 billion, and our free cash flow was $85 billion. It is important to note that this is about quality as well as quantity. Our return on average capital employed is around two times higher than the industry average. Our gearing is the lowest among our industry, and we are on track with implementing a growth program focused on maximizing shareholder value.
Indeed, we are positioned to capture upside value with 3 million barrels per day of available crude capacity and 2 million barrels of oil equivalent per day of incremental gas and associated liquids by 2030. We are also extending our technology focus as we move deeper into AI to develop value-added opportunities. This quality of delivery and opportunity is reflected in our dividend. We are increasing our base dividend by 4.2%, which is higher than the 4% increase over each of the past two years.
In addition, we are paying a performance-linked dividend at the top of the 50%-70% range of the additional free cash after external investment and base dividend, sharing any upside exactly as promised. The strong performance and continued value creation are why we believe Aramco is a very attractive proposition for investors both now and long into the future. Turning to our macro outlook, we have seen global demand rise by 1 million barrels per day to a record 104.8 million barrels per day in 2024, and we expect this to grow further in 2025.
This will be driven not just by robust Asian demand, where we see the region driving 60% of the global growth and where we are a major player. We are well positioned as the global aviation demand continues to be positive, and demand for transport fuel is also increasing and forecast to reach a six-year high in 2025. Despite some headwinds, we have seen demand for petrochemicals continue to rise steadily, and we expect this trend to continue.
Meanwhile, global oil inventory levels have declined to around five-year lows, which means there are potential risks related to geopolitical uncertainties and volatility. Against this backdrop, Aramco remains ready for all scenarios. We currently have the readily available capacity in the form of three million barrels a day that can be brought online quickly and at a limited incremental cost. We have multiple drivers of material growth. Consider our available spare capacity.
Every one million barrel of spare capacity required to meet global demand could translate to $12 billion in incremental operating cash flow based on last year's average price. As for gas, we expect sales gas production capacity growth by 2030 of more than 60% over 2021 sales gas production levels to meet the Kingdom's rising captive demand. This equates to around one million additional barrels of oil per day for export, as well as a further one million barrels per day of associated liquids.
In other words, this growth in gas has the potential to generate very attractive and stable returns, with expected incremental operating cash flow of around $9 billion-$10 billion in 2030, and of course, subject to future sales gas demand and liquid price in a given year. Meanwhile, in our downstream business, our strategy of creating value through increased integration remains unchanged. In 2024, more than 50% of our crude oil production was delivered directly to our own downstream operations.
We also continue to grow our liquid-to-chemical business with low equity, high crude placement investment in key Asian markets. Our goal is to increase capacity by up to 4 million barrels per day by 2030 in petrochemical-producing complexes where we have an equity interest. We also see further integration in the retail space given our refining and lubricant portfolios.
In total, we see a combined upside in our downstream portfolio expected to be around $8-$10 billion in operating cash flow by 2030 from liquid-to-chemical growth based on a five-year historic average price and performance improvement across the business. The total of this increment will reflect the level of crude oil we produce, hence the sensitivity of $12 billion per year for each one million barrels.
If, for illustration, we were called upon to use half of the available capacity in 2030, the additional $18 billion compared to 2024, plus the $17 billion-$20 billion from gas and downstream, would equate to over $35 billion additional operating cash flow, over 25% higher. Meanwhile, in new energies, we are leveraging the kingdom's advantaged solar and wind resources and geology to capture any and all value-additive opportunities. In addition to capturing these growth opportunities at attractive returns, new energies offer an optimized and economic pathway toward further lowering our greenhouse gas emissions.
Renewables is a key component of our decarbonization levers with high growth prospects in the kingdom. The CCS hub in Jubail also positions Aramco uniquely for decarbonization and low-carbon hydrogen production. We are also investing in some of the largest solar PV plants in the world here in Saudi Arabia and through the Public Investment Fund Renewable Program. Solar is expected to be a key electricity source in the kingdom. Certainly, the economics are very favorable with the availability of abundant flat and vacant land at very affordable cost with lots of sunshine.
Blue hydrogen, we continue to evaluate our growth opportunities and will only go ahead if we secure off-take agreements with appropriate returns. On this front, commercial discussion is ongoing. However, until these come to fruition, our focus is on discipline with a revised target of 2.5 million tonnes per annum by 2030 while continuing to pursue value-creating opportunities in this space. Finally, we have significant opportunities to unlock further value from our upstream assets, including lithium.
We will do this with our deep knowledge, skills, and experience with our low-cost, high-value approach. Let me now move to our gas program, which is significant in terms of high growth prospects with attractive and stable double-digit returns. We have delivered world-class projects over the past few years that have confirmed our leading project execution.
Together, these projects have supported our gas maintained potential and brought onstream an additional 1.75 billion standard cubic feet per day of sales gas capacity and gas storage capacity, which provides flexibility to manage demand peaks and improves plant utilization. The execution continues with a series of projects to deliver the target to increase sales gas production capacity of over 60% compared with 2021 sales gas production. In conventional gas, we discovered two natural gas fields and two natural gas reservoirs in the Eastern Province of the Kingdom.
Meanwhile, our energy plan is on track to come onstream this year, and we have awarded EPC contract for our Fadhili gas plant, which will add 1.15 billion of sales gas production capacity starting from 2027. In unconventional gas, the first phase of Jafurah development is also on track and is expected to produce 200 million standard cubic feet per day of sales gas later this year. But we are not stopping there. Contracts have been awarded, and work has already started on the second phase of the project.
By 2030, we expect production from Jafurah will reach a sustainable sales gas rate of 2 billion standard cubic feet per day. Progress is also being made on the Master Gas System phase III , which is expected to expand the size of the network by 4,000 kilometers and add 3.15 billion standard cubic feet per day capacity by 2028. On the international front, we also increased our ownership in MidOcean to 49%. This helped fund the acquisition of an additional interest in Peru LNG.
This investment, along with preliminary agreement with other global partners, is expected to provide around 7.5 million tonnes per annum of LNG volumes with attractive trading opportunities. In liquids, we continue to show our world-leading execution capability and delivery. Over the past few years, we have delivered a combination of high-value projects, including the upgrade of 11 oil facilities, adding 240,000 barrels per day of liquid capacity, and completed the installation of 128 offshore jackets and 43 production platforms.
We have also increased the capacity of our east-west pipeline to 7 million barrels per day. The pipeline demonstrated its strategic importance last year amidst the tensions in the strait. We also successfully delivered multiple pipelines and tankage projects. We continue to deliver, bringing world-class projects onstream with major increments, including Marjan, Berri and Zuluf on track for the targeted completion date, and adding about 1.2 million barrels per day of liquid capacity. This increment will also reinforce our unique ability to rapidly respond to any changes in the market and realize upside value addition.
Finally, in 2024, we made further progress in discovery by announcing two unconventional oil fields and one Arabian Light oil reservoir. The true value of Aramco comes from our integration of all of our significant upstream strengths with our downstream attributes. Three highlights stand out in the downstream. First, we strengthened our downstream portfolio. Second, we continued to de-risk our upstream position. Third, we captured additional value through further integration. We did all these and more while maintaining industry-leading reliability of 99.7%.
In 2024, we saw 53% of our crude utilized by our downstream system up from 47% in 2023. We also continued to grow our liquid-to-chemical business. To date, we have achieved almost half of our long-term target of increasing our capacity in petrochemical-producing complexes up to four million barrels per day by 2030. We continue to take a disciplined approach to our liquid-to-chemical strategy with a low equity, high placement investment approach.
We expect to see even more progress in the next two years as we have major projects expected to come onstream in Korea and here in Saudi Arabia, and we have two more projects under construction in China. Both are in Fujian and are expected to come onstream in 2027 and 2030, respectively. We are also continuing to grow our retail business. Our acquisitions in Chile, Pakistan, and recently in the Philippines, for example, are in markets with short positions in fuels. This complements our long-term position, enabling us to capture incremental value.
These investments also provide us with new avenues of growth for our Valvoline lubricants and unlock further trading opportunities. The benefits of this increased integration show up in our numbers. We saw our finished lubricants sales grow by 23% from 2023 levels, while our base oil sales grew 9% year on year. We also see value opportunity between our expanding downstream portfolio and our growing trading business. In 2024, we traded an average of 7.3 million barrels per day of crude oil and refined petroleum products, representing growth of 7% year on year.
We also traded 5.9 million tonnes of liquid chemical products, up 26% year on year. This growth reflects the value of the integration within our system. We continue to expand our trading into new products to help create additional value and better optimization of our global downstream assets. The benefits of our vast acreage and exploration resources mean we can unlock additional value from our existing assets. For example, we have significant cost advantages, rich geological data, and significant areas in which we operate.
Together with these attributes, we now have advanced AI with high-performing capability to assist and model the subsurface in a way that was not possible in the past. Recently, we identified high concentration of lithium and other base metals. The exciting opportunity set here is underpinned by strong global lithium demand and the advantages we already have in our concession and our available data with high growth potential and limited capital outlay. Indeed, the lithium market alone is projected to expand threefold over the next five years.
And the forecast compounded annual growth rate is 15% through 2035. This is made even more attractive with the emergence of technologies such as direct lithium extraction, allowing for more efficiency with lower emission and water usage than traditional mining. To leverage this advantage, we recently signed heads-of-terms agreement to partner with Ma’aden to establish a JV focused on extracting these high-value transition minerals from within the kingdom. Depending on the progress of this JV, commercial lithium production could commence by 2027.
Before I hand over to Ziad to walk you through the financials, I want to talk about one other area we are leveraging technology in general and AI in particular. As you know, Saudi Arabia has large hydrocarbon reservoirs. Aramco, meanwhile, has 90 years' proprietary data collected from our seismic surveying and production. Data that we are now putting to use through AI to further improve the efficiency of our operation and create additional value. Our Abqaiq facility is a good example. It was originally built some 70 years ago and today handles around 5% of the global crude production.
At Abqaiq, we have invested and deployed cutting-edge technologies such as machine learning trained on around 2 billion data points, helping to ensure all of the facility's 18 crude stabilization units are monitored to achieve optimal performance. Abqaiq is one of the five Aramco facilities that have been awarded Global Lighthouse Network recognition by World Economic Forum. Overall, we collect 10 billion data points across our facility each and every day.
This data goes straight to our Engineering Solutions Center, enabling us to leverage cutting-edge technologies to maintain our upstream preeminence. Let me give you some examples of AI in action. Our advanced petrophysical prediction AI tool helps reduce operation costs and rig standby charges by generating synthetic wireline logs instead of logging runs. Our geosteering digitalization provides real-time updates to geological models by integrating drilling and geoscience data, enabling optimization of well placement within the most prolific zones of oil and gas reservoirs.
Using advanced digital solutions, we have also developed a sophisticated integrated model to optimize our global downstream assets and our growing trading capability to their full potential, which we expect will contribute to additional future earnings. The deployment of AI and digitalization technologies in our upstream business translates into the lowest lifting cost of $3.5 per barrel and the lowest capital intensity amongst our peers.
These numbers speak for themselves, with our total upstream cost per barrel being 57% lower than the average of the IOCs, and our upstream carbon intensity is 56% lower than the average IOCs combined. Let me touch upon how we are extending our digital technology leadership to advance AI development. Overall, in the area of AI and digital, we now have more than 420 use cases. This has in turn resulted in several big tech companies wanting to collaborate with us because of our unique scale, our domain knowledge, our integrated operations, and the historical data we have on hand.
Our focus on expanding the role of technology in our operation is further matched by our total R&D investment, which has grown 64% in the past three years, always with a focus on value. Our global venture capital fund now stands at $7.5 billion, making Aramco one of the top corporate venture funds globally, focusing on disruptive technologies in energy, sustainability, and digitalization. The fund now holds stakes in 16 unicorns in its portfolio, each valued at over $1 billion, with three of these achieving the status in 2024.
Ultimately, we are driving for value as we invest in AI and digital solutions. We have successfully captured $6 billion of technology realized value over the past two years, and we expect to realize another $2 billion-$4 billion in 2025 from technology developed in-house and through ventures. On that note, let me hand over to Ziad to provide more details about our 2024 financial performance.
Thank you, Amin. We continued to deliver a strong and resilient financial performance in 2024 despite market volatilities. Our net income was $106.2 billion in 2024, which, while down by 12% versus 2023, demonstrates our relative resilience as our peers saw a 26% decline in net income over the same period. This is despite significant non-cash charges we had in 2024. Without it, our net income would have been around $109 billion. Our upstream EBIT was solid at $213.6 billion, mainly driven by lower oil prices and volumes.
Our downstream EBIT was negative $2.9 billion, mainly due to continued weakness in margins as well as certain non-cash items. Underlying EBIT for our downstream business was actually a positive $200 million. Operating cash flow was robust at $135.7 billion. Meanwhile, capital investments totaled $53.3 billion, which is within the guidance range we provided. Our balance sheet remains healthy, with a strong investment-grade credit rating and gearing of 4.5%. And the year-on-year increase in gearing is in line with the plans we have communicated to you to gradually further optimize our capital structure.
Last but not least, our 12-month rolling ROACE was 20.2%. Once again, this is well ahead of our peers. And keep in mind, this is also despite the fact that our ROACE is negatively impacted by around $90 billion of assets under construction, which are on the balance sheet but not yet operational to generate returns. Now, zooming into our quarterly performance, our net income was $22.3 billion in Q4. This includes around $2 billion of various non-cash items. Without these, our net income would have been around $24 billion. Our upstream EBIT was resilient at $50.3 billion.
This is down by only 10% year-on-year, despite a 15% decline in realized oil prices, which was partially offset by slightly higher Q4 volumes than Q4 of last year. Compared to Q3, there was an 8% decline in prices and a 4% decline in volumes, but only a 5% decline in our upstream EBIT. This reflects the resilience in our upstream business on the downside. In downstream, reported EBIT was negative $2.1 billion due to the non-cash items. Downstream underlying EBIT roughly broke even despite continued weak margins.
Despite a drop of about $13 per barrel year-on-year in crude oil prices, our operating cash flow was relatively stable at $35.8 billion, and it was actually up slightly quarter on quarter, reflecting the strength of our underlying business. Capital investments for the fourth quarter totaled $15.1 billion to finish the year in line with guidance, and we generated some $21.6 billion of free cash flow in the quarter. Now, before I turn it back to Amin, let me take you through our financial framework, which is consistent and based on disciplined capital investments, a clear distribution framework, and a strong balance sheet.
We're delivering on this framework consistently as promised. As we said previously, with our current set of investment opportunities, we expect capital investments to grow until around the middle of the decade, and our guidance for 2025 is $ billion-$58 billion as we deliver on the projects outlined to grow shareholder value. This includes external investments but excludes around $4 billion of project financing. As in previous years, you should expect this range to narrow further as we progress through the year.
On distributions, today we announced an increase in our quarterly base dividends by 4.2% billion to $21.1 billion to be distributed later this month, projecting an annual base dividend of $84.6 billion. This 4.2% increase comes after a 4% increase in 2024 and a 4% increase in 2023, demonstrating the company's ability to deliver a base dividend that is not only sustainable but also progressive.
Over the past three years, this amounts to around a 13% increase in our base dividends. In addition to base dividends, we are also delivering on the mechanism for performance-linked dividends, where we said we would distribute 50% to 70% of our excess annual free cash flow net of external investments and base dividends. In 2024, we generated excess free cash flow despite lower prices, lower production volumes, and weaker downstream margins.
Today, we announced the first quarterly performance-linked dividend of $220 million based on 2024 results, projecting an annual performance-linked dividend of $880 million in 2025, which is at the high end of the PLD range at 70%. So, in summary, we expect total dividend distributions of $85.4 billion in 2025, comprised of $84.6 billion of base dividends and $880 million of performance-linked dividends.
This emphasizes our consistent focus on shareholder value alongside disciplined capital investment and maintaining our strong balance sheet. As always, dividends to be paid in the rest of the year remain subject to Board approval. On that strong theme, let me hand you back to Amin.
Thank you, Ziad. And before we move to Q&A, I want to leave you with a quick summary of how Aramco creates shareholder value in the near term and longer term. We remain focused on delivering a highly attractive combination of both value and growth. We have paid more dividends than any other listed company over the past five years, with around $440 billion distributed. We have a progressive and sustainable base dividend, which we have increased consistently over the last three years.
This is complemented with a performance-linked dividend that ensures shareholders rapidly benefit from any additional upside. We maintain a very strong financial framework, and we are also truly tech-driven, maximizing technologies, including AI, to optimize our operations. Our competitive advantages underpin our results and delivery.
We have a unique scale, low lifting cost, lower upstream carbon intensity compared to our peers, and an exclusive access to Saudi Arabia's vast oil and gas reserves. We see these strengths and these advantages as unmatched. And this is why we believe we offer an attractive investment proposition. With that, we would like to now take your questions.
Thank you. Of course, to ask a question, please press star followed by one on your telephone keypad. To withdraw your question, please press star followed by two. When asking a question, please ensure you're unmuted locally. I shall now hand back to Mr. Hutton.
Thank you very much. And the first question comes from Iyad Ghulam of SNB Capital. Go ahead, Iyad.
[Foreign language]السلام عليكم، كلامت بخير. I have two questions. One about the CapEx. So, what will be the main spending areas for CapEx into 2025? And will this include the beginning of Jafurah phase II? And the second question is about the non-cash one-off of around 7 billion SAR in Q4. Can you shed some light about this expense? Thank you.
Thank you. I'll take the first question. Ziad will take the second. With regard to our CapEx, as mentioned, the guidance is $52 billion-$58 billion. That year, we are at $53.4 billion. And if you look at the short term for our CapEx split, you're talking about 60% for upstream, 30% for downstream, and 10% for new energy. Over the long term, it's 50% upstream, 35% downstream, and 15% new energies. Most of the spending in upstream is focused on gas, as we highlighted in the remarks. We are growing the gas by more than 60% by 2030.
Jafurah definitely is adding, by that time, by 2030, close to 2 billion sales of gas. We will put phase I on stream this year. Phase II already kicked in. So, the spending on phase II started already for phase II, and we are on track to put it on stream at full capacity by 2030. And as I said, gas is a captive demand. We have a big market in the kingdom, and that's why we are focusing.
And the rate of return is double-digit in terms of rate of return for Saudi Aramco, and that's why the focus on gas, in addition to the benefits that we get out of it because of the liquid, 1 million barrels of additional liquid, about a lot of ethane, more than 400 million standard cubic feet per day of additional ethane. At the same time, for the kingdom, it will help to cut the liquid utilization in the utility sectors for liquid burning.
We have close to 1 million barrels that additional gas will help to almost reduce 50% of that liquid utilization, and the rest will be handled by renewable, the solar and wind that is growing rapidly in the kingdom. It has a lot of benefit for the Kingdom and for Saudi Aramco with the double-digit rate of returns. We have huge resources in terms of gas for development, so it gives us a lot of benefits and additional value for our shareholders.
The non-cash charges were about $1.7 billion. There were certain charges, non-recurring, non-cash recorded in the fourth quarter, mostly impairment charges related to some downstream facilities. We have a very strict process of assessing and initiating potential impairment tests in accordance with IFRS. And so, we're very conservative when it comes to these, and the result of that was taking a $1.7 billion non-cash charge that is non-recurring.
Thank you, Iyad. The next question is from Martijn Rats at Morgan Stanley. Go ahead, Martijn.
Thanks for taking my call. I wanted to ask too, if I may, also on CapEx, there was sort of previous guidance, and you sort of alluded to CapEx would grow until the middle of the decade. Now, I know it's only early 2025, so asking for 2026 and beyond might be a little early. But I was wondering if the implicit indication that this would be sort of the year of peak CapEx and that we should see some sort of moderation in 2026, is that how we should interpret these comments? And does that sort of still stand?
And the other one I wanted to ask is about the balance sheet. The balance sheet still remains very lowly geared. I was wondering if at some point you would see an opportunity to perhaps use the balance sheet to sort of improve the distributions from Aramco, particularly in light of what could possibly then be CapEx kind of flatlining or rolling over. Can you say a few words on how you see the trajectory for the balance sheet in the next couple of years?
Thank you, Martijn. I will take the first question with regard to the CapEx, and Ziad will take the second question with regard, as I said, the guidance. You've seen what we have done in 2024, and the guidance is 52billion - 58billion. We have huge growth potentials and opportunities, and the guidance is that around the middle of the decade. We will see what will happen in 2026. But we are growing the gas and, depending on the opportunity, there is a lot of requirement for additional gas, and there is a lot of opportunities that exist.
We're doing Master Gas System three right now, which will approximately 4,000 kilometers to connect the rest of the Kingdom, a lot of cities for industrial and utility utilization. And depending on the opportunities that might exist, we will be looking at the guidance for the years ahead. But for the time being, we are very prudent when you look at our capital investment, and the focus is in anything that will add value to Saudi Aramco. And it all depends on the opportunity that will come our way in the years ahead, taking into consideration our balance sheets and the dividends and the progressive dividend that we have to satisfy.
Martijn, on your second question, you're absolutely right. Gearing of 4.5 is or remains very low. The last few years, we were deleveraging the company for about three years, and then, because we manage gearing across the cycle, then we're starting levering up. Also, during that period of deleveraging, it was the same time that capital markets were very volatile, so our financial strength allowed us to elect to sit out while the volatility was too high and the conditions were not very conducive for us to go out with debt issuances . That changed last year. You saw us go out with $9 billion of a combination of bonds and Sukuk.
We still think the markets are conducive, and we're still, as we promised in the past, we're still increasing the level of debt to a more healthy capital structure, a more healthy mix of debt and capital. And so, you can expect us to go out this year as well. I won't comment on exact quantums because it depends on the markets themselves, but you can expect to see gearing go up. All our debt issuances, as you know, are general corporate use, so I wouldn't be able to pinpoint exactly where that is going. But the result, or directionally, we agree with you.
Wonderful. Thank you. Yeah.
Just one thing, Martijn, to add is we always also have flexible capital in our programs when we give guidance. And that flexible capital, we can tap into it if needed, as I said, to satisfy our obligations in terms of dividends and progressive dividends and all of these things. So, always when we give guidance, we take into consideration a certain amount of flexible capital that we can tap onto and execute accordingly to manage any unforeseen issues that we might see in the market.
Thank you.
Thank you.
Thanks, Martijn. And the next question is from Sashank Lanka at Bank of America. Go ahead, Sashank.
Yes. Thank you very much for the presentation and the opportunity to ask questions. I have three questions, if that's okay. First one is on Jafurah. I just wanted to understand how the progress has been and maybe some details around that, given it's the first of its kind in Saudi when it comes to non-conventional. The second one is on the blue ammonia side of things. You have obviously now scaled back the target of 2.5 million tons. I think earlier you had 11 million tons up to 2035.
So, just want to understand how the progress has been. I think on a number of times you've said off-take contracts have been quite challenging. So, has it gotten more challenging versus a year back, or is it the same? And yeah, the third question is on your downstream side of expansions. It seems like most of your downstream expansions are now focused on China. I think in Saudi, you just have the Amiral Complex that you're expanding. And so, is it fair to assume that going forward, Asia will be a key market for downstream versus Saudi for you? Thank you.
Thank you, Sashank. With regard to Jafurah, it's a big basin. It's talking about a resource of about 229 trillion cubic feet of gas, 75 billion barrels of condensate or liquid that is available in Jafurah. That's why the interest of Jafurah. We have awarded 16 contracts for about $12.4 billion for the phase II development. Phase I is supposed to come on stream this year, but we started phase II, which phase I will bring a small amount of about 200 million SCF and 2 billion standard cubic feet per day from Jafurah will come by 2030.
The interest in Jafurah, because of, as I said, the liquid, we are bringing 630,000 barrels of gas liquids from that 2 billion and 418 million SCF of ethane. If you think about the kingdom and amount, we are big in petrochemicals, SABIC, and other entities within the kingdom. The total ethane available is about a billion. So, basically, we are almost bringing more than 40% of the ethane that exists in the kingdom right now just through from Jafurah alone. So, progress is going very well. We are on track.
We should, around end of 2027, have phase II and then ramp up gas drilling until we reach the 2 billion by 2030. That's where we are right now, but the progress is on track for the full development of Jafurah. With regard to blue ammonia, you are absolutely right. We have been saying from day one, it's expensive, but if the off-take, not only for blue hydrogen, it's even for green hydrogen. We always said that green hydrogen is around $400 per barrel for equivalent or more, and blue ammonia or blue hydrogen is around $200 per barrel for equivalent.
What we have done in Aramco is we did the engineering to know that when bidding comes, we will know what to bid because bidding is basically based on an off-take. An off-take for a long term, we need to know exactly where to price our ammonia. And our number reflects to the market today. We think we have adjusted it. We had 2.5 million tons per annum by 2027. Now, we adjusted it to 2030. You are right. The 11 million tons is there. We did the engineering. We are waiting for the market to develop and the off-take. We are bidding right now at this stage.
We did bidding a couple of months ago in Korea. We are waiting for the results of these bids. But the market is not developing quick enough, considering the high cost, and we understand that. And we said that from the beginning, but we are ready to avail any quantities provided the off-take is there. And we have been very prudent. We always said we will not kickstart the project until the off-take is there. And this is what we have done.
With regard to our downstream expansion, you are right. It is focused in Asia, and we have done big projects with Shaheen in S-OIL in Korea. We have a project in Malaysia with Petronas, and we have a number of projects in China. China, when you look at chemical and liquid-to-chemical, is 40% of the market when you talk about chemicals. There is a huge growth driven by the transition in China.
A lot of electric vehicles, solar panels, they need a lot of carbon fiber, and they are shifting a lot of either they're building new green refinery integrated with petrochemical with 60%-70% conversion, or they are upgrading certain assets. So, there is a huge growth to satisfy that requirement in China. And this is where we are putting light investment. You're talking about 10%-30% depending on the assets. But we ensure that in addition to being in that market, we place our barrels in these markets.
So, with that 60%-70% placement of our crude on these assets is ensured for us to invest in these assets. And this is what's happening. It is a growth market for us in terms of demand, and we are putting our investment in Asia. We're looking at other entities for investment in Asia, also outside China. But China remains an important and a growing market for us, especially in the liquids-to-chemicals growth strategy that they have.
Thank you.
Thank you, Sashank.
Thanks a lot. And the next question is from Henri Patricot at UBS. Go ahead, Henri.
Yes, everyone. Thank you for the update. Two questions from me, please. The first one on the downstream and the cash flow uplift that you target by 2038 to $10 billion. I was hoping you could give us some details, a breakdown of where you see the uplift coming from. You mentioned on the slide a few things such as SABIC synergies, a few of the projects, and maybe trading is contributing here as well. So, any details would be helpful.
And then secondly, kind of following up on the question on blue ammonia, given the reduced targets for 2030, what are your thinking around LNG projects in the kingdom? Has that become more of a priority as a result? Thank you.
Thank you. And I'll take the second question. Ziad will take the first question with regard to the operating cash flow for downstream. Yeah. As I said, for blue ammonia, we revised the target. This target used to be in 2027. Now, we took it to 2030. We talked about the 11 million tons of ammonia, and it's still engineering is done. We are available in terms of execution, but we didn't kickstart any of the projects, waiting to see the off-take materialize. Without an off-take, this project will not start. Now, there is a growth in the kingdom when it comes to utilization of gas.
That's why we are building the Master Gas System three, and building on the availability of additional gas beyond what we are putting in the market, because what we have allocated for the blue ammonia was only 1 billion at that time to satisfy the 11 million tons. It's not that significant in terms of size, but we would like to wait and see what is going to happen with the blue ammonia and the bidding process that has already started in Korea.
We're waiting for other markets to start their bidding process before we make any decisions on any LNG or any other things to start with that available gas. We are hopeful that the bidding process and the need for that blue ammonia and the off-take that we are going to see will materialize, but we will see. It's a matter of the first half of this year to see the results and where we will be heading with blue ammonia or the off-take will materialize or not. Ziad?
Henri, on your question on downstream incremental operating cash flow, which we're expecting $8-$10 billion by 2030, which is calculated using five-year average, which we believe is a good marker for margins. Mind you, this includes periods of lower margins that we experienced during COVID and also in 2024, so that period of five years. That comes from three main sources. First and foremost is the transformation effort the downstream is going through.
Every asset in our downstream portfolio is undergoing a transformation process to squeeze more out of the asset, to sweat the asset, and try to get both cost reductions as well as synergies and low-hanging fruits on the upside as well, like upgrades or the like, that use relatively low capital to increase cash flow generation. The second source is our new investments in downstream. So, these investments that we've been telling you we're making and that we're going to continue making, those will generate positive additional operating cash flow. And then the third bucket is synergies.
You mentioned the synergies with SABIC. That's certainly one of them, but also synergies across the different group. I'll remind you, we have concentration of downstream assets in two cities that allow us to maximize synergies because these facilities are fence to fence next to each other, so the synergy levels are high. So, those are the three sources of those.
Thank you.
Thanks, Henri. And the next question is from Matt Lofting of JP Morgan. Go ahead, Matt.
Hi. Thanks, gents, for taking the questions. A follow-up, actually, from the last question. I wondered if you sort of take a step back, if you combine the cash flow or incremental cash flow growth that you're projecting to 2030 through both gas in the upstream and the downstream piece as well, and it's sort of close to the upper end, 20 billion of incremental cash flow. How much of that is, if you aggregate it, is underlying versus carrying some form of price or margin improvement dependency?
I think, if I understood the slide right, that sort of the base year is 2021 in terms of those numbers. So, the second part of the question is how much of those numbers have already been delivered in Aramco's 2024 financials versus still to come. I'm just trying to understand the profile or the trajectory to those numbers and how that's influenced how you've thought about continuing to grow the ordinary dividend. Thank you.
Thank you, Matt. I think that 2021, the year you are referring to, this is the year where we said the growth of more than 60% by 2030 is starting 2021 in gas. However, as Ziad highlighted, with regard to the downstream, we took the margins average for the last five years. We are very cautious when we are forecasting the operating cash flow by 2030 because we took the average of the margins over the last five years, so including bad years like 2020 and 2021, and we took that average to reflect the margin that we will be seeing with the growth that we have in downstream going to 2030.
We did not put an upside when you look at it compared to taking we use the average, so it's a very cautious way of looking at it. With regard to the gas, it's a captive market. Before we start the projects, the agreement is we are guaranteed a double-digit rate of return, so we do our engineering, we look at our cost, and then we agree with the regulator about this is our rate of return.
And the agreement is, since the concession agreement is because it is a captive market, we get a double-digit rate of returns before we start executing the project. So, we don't have any issue in forecasting the gas because it's very clear because this is the way we execute projects. Do you have anything to add?
Yeah. So, Matt, in that sense, that means all of it is underlying because none of it is depending on increases in prices or margins or what have you. And just to be crystal clear, the baseline we're using for those numbers is 2024. So, the $17 billion-$20 billion of additional OCF between upstream gas and downstream, so between gas and downstream, is from a base year of 2024 using actual margins for downstream for the past five years and using the kind of double-digit returns that are guaranteed for the gas CapEx that we're actually making.
Okay.
Thanks, Matt. Appreciate that. I think you hit a rich theme there. Let me move to Kim Fustier of HSBC. Go ahead, Kim.
Hi. Good afternoon, and thank you for taking my questions. Two, please. Firstly, on CapEx, I wondered if you could talk about how much inorganic CapEx you've penciled in within the $52 billion-$58 billion range for this year and whether these acquisitions would continue to be quite downstream-focused as they have been for the past 18 months, or would you look at upstream and midstream acquisitions as well?
Then secondly, could you talk about the expansion of your liquids and chemicals trading business? Your upstream equity production has been relatively flat on the liquid side, so I just wondered how you've been able to increase those traded volumes. Are these third-party volumes? You're getting under off-take contracts or spot volumes? Any kind of color around that would be useful. Thank you.
Thanks for the questions, Kim. On CapEx, we don't specify the actual amount in the guidance that we have for inorganic investments because a lot of this would impact a lot of the negotiations that we're having right now. But what I can tell you is it is not only downstream. The main focus areas are downstream and LNG, but then there are others that are also included. But the biggest areas are downstream and LNG, and they're really continuations of what you've seen us do.
So, don't expect many surprises on the downstream and the LNG. On the trading volumes, yes, you're absolutely right. These are third-party volumes. Our trading organization is always looking to grow beyond the system. It does depend on the system, and it does benefit from having a backing of a system, but it is growing considerably its third-party volumes.
Thanks, Kim. And the next question is from Irene Jiménez at Credit at Bernstein.
Thank you very much. Thank you. First question on chemicals. Can you hear me? Yes, we can. Yes. Thank you. My first question is on chemicals. You're directing a lot of your liquids to petrochemicals. Can you please talk around how you see the key drivers of the cycle evolving, and when do you anticipate that petrochemical cycle to start recovering?
Then secondly, I think you stated that you have around $90 billion on the balance sheet of assets under construction but not yet in service. So, when we think of the potential return on that $90 billion of capital, so not cash, but return, should we anticipate in a flat price environment that new project returns will be similar to your current 20% return, please? Thank you.
Thank you, Irene. With regard to the liquid to chemical, our focus is where the market is and where the demand is, and how much of we look at downstream and upstream here because also we would like to place our barrels in the right market. As I mentioned earlier, China is 40% of the chemical market. China has a strategy by 2027, that range of satisfying most of their requirements in chemicals, and that's where a lot of builds that you see today there. Not only that, because of the growth in electric vehicles and wind and solar, they need a lot of carbon fiber.
And as such, the demand is significant. And that's why you will see most of these assets is at 60% conversion rate or 70% conversion rates, which is very complex. This is where we are placing our barrels. So, we benefit both sides, placement of our upstream barrels in the right markets, and at the same time, benefit from the demand in the right market, which is where we see the growth in chemical requirement. As you know, chemical is a cyclical in nature.
It is in a down cycle, and we are seeing a pickup in demand, but it will take time for that demand and margins to improve but it is right now going through a down cycle, I would say. The $90 billion, and when we talk about the operating cash flow addition, the $9 billion to $10 billion in gas and the downstream, the $8 billion to $10 billion, it takes into consideration that $90 billion asset that is currently under construction. We are building a lot. Most of our spend, I would say, in upstream is on gas. We're building a lot of facilities because there is a huge gas demand.
It's a captive market, and we are getting the right returns in this market. In the downstream, the focus, I would say, in the liquid to chemical in the right markets, and we are growing that, and we are putting that investment. And this is where we are also generating the additional cash flow. So, you would see by 2030, as highlighted, $17 billion-$20 billion additional operated cash flow coming out from gas and downstream, not to mention the crude yet.
Yeah. Maybe the only thing to add, Irene, to what Amin said is if you just mathematically, if you take out the $90 billion, our ROACE would be actually 4 percentage points higher than the reported 20.2%.
Thank you very much.
Thank you, Irene, and the next, thanks a lot. And the next question is from Syed Akhtar of Al Rajhi. Go ahead, Syed.
Hello. Can you hear me?
G o ahead, yes. Yes, we can.
Go ahead, Syed.
Hi. First of all, thank you for having connected this call. I have one question regarding the dividend policy. What I understood is this: that the company is still targeting to give the performance-linked dividend in 2025, or there is no chance of performance-linked dividend in 2025?
Yes, Syed. Thank you for the question. The performance-linked dividend is a formula that we are not changing. Like we said last year, it's actually here to stay. We plug in the free cash flow for the group. We subtract the base dividend that was paid during the given year, in this case, 2024, and then we take out the external investments because those were not included in or not deducted from the free cash flow.
And then the resulting, which we like to informally refer to as excess free cash flow, we distribute 50%-70% of it. This year, what we announced today is the board decided to distribute 70% of the excess free cash flow. And so you see a payment of PLD that will happen later this month of $220 million. And if you then take that for the year, it's estimated to be $880 million. So the total of the that would be added to the base dividend that you also saw today.
Yeah. Just to add to what Ziad highlighted and Saeed, the performance-linked dividend was a mechanism that was put a couple of years back, two, three years back, and the purpose is to share the upside with the investors or shareholders. And this is what we have done. There was an upside in 2022, smaller amount in 2023 compared to 2022, to approximately $60 billion that was distributed over six quarters. And the upside for Aramco is always there. You need to take into consideration we are sitting on three million barrels of spare capacity.
And we've seen with some increase in production in 2022 and improvement on the price of the barrels or margins in a good year, how much additional cash that we can accumulate beyond our base dividend and progressive dividend. And this is why the mechanism was established. Anytime there is an upside, we would like to share that with the shareholders and investors going forward. And this is why this year, even though it's not a lot, but the mechanism kicked in at 70% of what beyond our base and progressive dividend and after satisfying our external investment, and that's where the $200 million per quarter came in. Thank you.
Thank you. It's much clearer. It's much clearer. One last request, not a question, one last request, because this is the first time I have witnessed in Aramco when they announce the result. Usually they have very good disclosure. But this time, the disclosure is very limited. I know you posted the Board of Directors Report. I went through it, but most of the market, they don't go in so much detail. So it will be a good thing that Aramco continues its legacy of giving a good disclosure, explaining the results as they used to explain. And thank you.
Well, Syed, we always appreciate the feedback. I'm not aware of any change in disclosure practices, but we always welcome the feedback, and we'll come back to you if there's anything to follow up with. Thanks very much. Okay. Just to let the callers know, we've got time for two more questions. And the first of those two questions comes from Eva Zenias at BNP Paribas.
Hi. Good afternoon. Thank you for the presentation. I've also got a couple of questions related to the downstream business. Firstly, are you able to give any indication of whether there's been some recovery in the first quarter of this year so far? And sorry, a quick one if I can squeeze in. Do you have an indication of which quarter in 2026 you expect Shaheen to start up? That would be helpful. Thank you.
The global refining margins declined in 2024. I mean, they're still relatively low. Of course, 2022 and 2023 saw historic high levels. In terms of our own Aramco refining assets portfolio, I need to remind you that the downstream to us, and especially the drive to liquids to chemicals, is to balance our product portfolio more so that we have an even more balance between refining margins and chemical margins. So to answer your question directly, have we started seeing recovery in margins? The answer is margins continue to be low, and so we would obviously like to see a lot better recovery.
The problem is there's still a lot of investments. China continues to build for self-sufficiency. Yes, those investments are mainly targeting chemicals, but they do produce fuels as well because they are highly, highly integrated refining chemicals assets. As a result, both refining and chemical margins have been struggling. Now, this investment cycle is after China reaches self-sufficiency. That part is going to slow down considerably, and then demand will have a chance to catch up to the supply, and margins will improve on both .
I have to add to what Ziad said is the fundamentals in terms of will have an impact at a certain stage. It remains strong. We are seeing record growth in oil demand, and that will impact refinery utilization. Last year, it was highlighted 104.8 million barrels. This year, we're looking at 106.1, a growth of 1.3 million barrels. Driven mainly, 60% of that growth is in Asia. We are expecting that growth in demand that will have an impact on utilization over the midterms. With regard to our investment in Korea and Shaheen projects, projects should be completed next year. It has a design capacity of 3.2 million tons, and it's on track for completion next year.
Thank you.
Thanks very much. And then our final question of the afternoon is from Bertrand Hodee at Kepler Cheuvreux. Go ahead, Bertrand.
Yes. Thank you. I wanted to come back on Jafurah and on the condensate opportunity. You target very strong growth in terms of liquids from Jafurah, 630,000 barrels per day by 2030, which I understood is mostly condensate. Condensates have traditionally a very high value in international markets. Can you indicate any ramp-up in terms of volumes from those condensates, 2026, 2027?
And how should we think of the realized price associated with those condensates? If you can give us a range relative to Brent, if possible? Then a follow-up is, is the double-digit internal rate of return guaranteed for natural gas development include Jafurah and the condensate flow inside it?
Yes. Thank you, Bertrand. I cannot hear you.
Apologies, ladies and gentlemen. We've lost audio connection with the management team. Please stand by while we reconnect them.
Bertrand, can you hear us now?
I can.
Okay. Thank you, Bertrand, for your question. As I said, I cannot give forecast on the price of condensate over the short or long term. However, we are ramping up with phase one, even though it's a small quantity, 200 million SCF with some condensate that will be coming up. And then we are going to up until phase two, which is going to come toward the end of 2027, which is the full facility for the 2 billion. And then we will ramp up well production to reach the full amount of the 2 billion with the 630,000 of condensate.
So it will be coming gradually, starting sometime third quarter this year and growing up until you reach 630 by 2030. A good amount will kick in with phase II, which is coming toward the end of 2027. With the second part of your question with regard to the agreement with the government with regard to our rate of return, yes, it includes Jafurah and everything associated with Jafurah.
As I said, the captive market is ideal and good for Saudi Aramco because before we start executing any project, after we do all the engineering and we identify our cost based on the bids that we receive, we get the agreement about our rate of return with the regulator, and we execute based on that. So it guarantees that we get our rate of return, and we have a track record over the past five years of that mechanism with the government, and it is yielding the double-digit rate of return for us.
So going forward, we don't execute until we agree on the prices and the equalization that we get for every million BTU or any things that we put as a result of building these plants. So it includes Jafurah and other gas plants as well.
Thank you very much. Very clear.
Thank you, Bertrand. And apologies for the slight interruption as we're going through that last question. Okay. I think that is the last of the questions for this afternoon. I'd just like to take the opportunity to thank the CEO and CFO for joining us this afternoon and to thank everybody on the call.
As ever, if there are any questions that you have to follow up, investor relations is always there, so please don't hesitate to contact us on that one. And we look forward to being in contact with you again soon. Thank you very much. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.