Welcome to the Saudi Aramco's first quarter 2025 results call. We will be holding a question-and-answer session following the presentation. If you'd like to ask a question, please press star followed by one on your telephone keypad at any time. I shall now hand over to Mr. Peter Hutton to begin.
Hello and welcome to this audio webcast discussing Saudi Aramco's first quarter 2025 results. I'm Peter Hutton, Head of Investor Relations, 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. Our webcast today will include a short presentation and question-and-answer session, and we expect the call to last up to an hour. Please refer to the cautionary statement on forward-looking information, our regulatory filings, and our website for more details. With that, I will now hand the call over to Amin.
Thank you, Peter. Welcome, everyone, and thank you for joining us on our earnings call today. Aramco continued to deliver strong performance in the first quarter of 2025. This is driven by our unique scale, low-cost advantage, the reliability and efficiency in our operations, and the commitment of our employees to whom I convey my sincere thanks and appreciation. Our first quarter results were robust, with a net income of $26 billion, an increase of 16% quarter- on- quarter, and we generated a free cash flow of $19.2 billion. Our balance sheet also remained strong, with the lowest gearing amongst peers at 5.3%. Looking forward, we have significant upside in our operating cash flows. We are able to increase crude volumes up to 12 million barrels a day if required, very quickly, efficiently, and with little incremental cost.
Every 1 million barrels per day of spare capacity could translate into an additional $12 billion of operating cash flow based on 2024 average prices. By 2030, our gas growth program is expected to generate a further $9 billion-$10 billion, and in downstream, we expect to create an extra $8 billion-$10 billion from further growth and performance improvement. The strength of Aramco is highlighted by our industry-leading returns and attractive distributions, where our ROACE is around twice the average of our peers. All this supports the Q1-based dividend of $21.1 billion declared by the board, a 4.2% increase year-on-year. The attractiveness of this dividend is not only its reliability but its track record of growth. In addition, a performance-linked dividend of $220 million has been declared, aligned with our previously communicated mechanism. Both of these dividends will be distributed to shareholders in May.
Turning to the macro-environmental outlook, despite current market volatility, oil market fundamentals remain sound. Q1 2025 demand reached a record 104.3 million barrels per day, 1.7 million barrels per day higher than in Q1 2024, and similarly, refining in Q1 was also at record levels for the quarter. Non-OPEC crude production growth has slowed in recent quarters from prior years, as you can see in the chart at the bottom left. Against this background, global inventories are at five-year lows, where crude inventory coverage was around 40 days at the end of Q1 2025. This further amplifies the risk of supply, especially as we head into peak driving season. Currently, it is premature to assess the full impact of trade negotiations, as there are many moving parts.
Aramco is well-positioned, however, with a healthy financial position, flexible capital to continue to deliver on its growth commitments, and navigate any macro uncertainties. Aramco stands to benefit from the OPEC+ production increases, which started in April, with the announcement of an additional 0.2 million barrels per day by May, generating a potential annual addition of $1.9 billion of operating cash flow at $60 per barrel print using our indicative rule of thumb. A similar increase, as announced for June, would bring the same again. We have the flexibility of managing effectively through any volatility, with readily available low-cost and lower carbon intensity crude capacity, and our confidence in longer-term fundamentals remains intact.
This approach to business supports our advantage position and proven resilience through cycles, from our way of investing at scale and with unique opportunities to our ability to generate cash to our distributions to shareholders, all of which are highlighted on this slide. In addition to having the lowest lifting cost among our peers, our free cash flows are unrivaled in their predictability and scale. Even with the largest investment program in our history, our capital investments are below any of the international oil companies as a proportion of these cash flows. This means our cash availability allows the highest distribution to shareholders as demonstrated over the past few years. This is a testament to our capital discipline and our ability to navigate through the cycle with flexibility, even with unforeseen events.
On that note, let me hand over to Ziad to provide more details about our Q1 performance and the delivery of our strategy.
Thank you, Amin, and welcome everyone. During the first quarter of 2025, we continued to make significant progress towards delivering our growth strategy. In upstream, our liquids and gas projects are on track, further reinforcing our flexibility and capability to satisfy growing demand on liquids. Our growth in upstream is also anchored by our sustained competitive advantage in resource exploration, where the addition of 14 oil and natural gas field and reservoir discoveries continues our record of not only replacing our produced reserves but also expanding our reserve base to reinforce our longevity. In downstream, we continue to focus on offtake reliability and conversion of liquids to chemicals, allowing us to capture incremental value further down the hydrocarbon value chain. For the first quarter, 56% of our crude oil production was utilized by our downstream system, and we achieved 100% supply reliability, demonstrating our resilience.
In retail, we expanded our network and presence in selected high-value growth markets by signing and agreeing to acquire a 25% equity stake in UniOil Petroleum Philippines, subject to closing and regulatory approvals. In new energies, both Al Shuaibah 1 and Al Shuaibah 2 solar PV projects achieved full generation capacity in the first quarter as planned, taking our total operational capacity to 4.2 GW, with a further 5.5 GW approved and in progress, as we previously announced. We also launched the first CO2 direct air capture test unit in Kingdom, with the aim of leading the testing and innovation to lower the technology's cost curve in a way that could accelerate its scalability. Shifting to our Q1 financial performance, our net income was resilient at $26 billion. This is down just 5% year-on-year despite weaker crude oil prices and is up 16% quarter- on- quarter.
Our upstream EBIT was $51.4 billion, up 2% quarter- on- quarter, mainly due to high realized crude oil prices. Year-on-year, upstream EBIT is down just 6% despite an 8% decline in realized oil prices and lower volumes. In downstream, reported EBIT was $508 million, up on last quarter, mainly due to the absence of certain non-cash items. Year-on-year, downstream EBIT is down, reflecting a continued weakness in margins. Capital investments for the quarter totaled $13.1 billion, and we generated $19.2 billion of free cash flow. Our balance sheet remains robust, with a strong investment-grade credit rating and gearing of just 5.3%. The increase in gearing remains lower than peers and is in line with the plans we previously communicated to gradually further optimize our capital structure. Our 12-month rolling ROACE was around 20%, which, as Amin mentioned earlier, is also well ahead of our peers.
The Q1 dividend will be paid in May, in line with the level announced at full-year results, combining the 4.2% year-on-year growth in the base dividend with an additional contribution on top from our performance-linked dividend mechanism. Now, before we move to Q&A, I want to leave you with a quick recap of how we are creating shareholder value. With our industry-leading competitive advantages and unrivaled financial strength, we are focused on maximizing returns and growing operating cash flow to further underpin our world-class distributions. This is why we believe we offer a very attractive investment proposition. With that, we thank you for your attention. Amin, Peter, and I are pleased 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 over to Mr. Hutton.
Thank you, Charlie. To start the Q&A, the first question is from Martin Rath at Morgan Stanley. Go ahead, Matan.
Hi, hello. First of all, I'd like to say thanks for reintroducing the quarterly disclosure on the production split between liquids and gas. I know we have this on an annualized basis. It may not be the biggest thing, but it does help the modeling. So I'm very pleased to see that. I wanted to ask you about capital expenditure, as of course, in one Q, we still had higher oil prices than we have today, although they are coming back a bit as of this morning. Nevertheless, it does look like with the oil prices that we've had over the last couple of weeks, the financial framework for the balance of the year, yeah, might be tighter than what we expected before. With that, I can imagine there might be some pressure on CapEx.
I was wondering if the company has been making any changes to CapEx plans for the balance of the year and for 2026, that might lead to a different outcome than we've been expecting.
Thank you, Martin. Yeah, we always look at the potential to improve efficiency in our spending, and we are building in the flexibility, and the discipline is embedded in our planning. Capital discipline is also about taking opportunities that we see. We have demonstrated that flexibility when appropriate in the past, always recognizing the ability to generate long-term value. We continue to monitor market condition and maintain our guidance of $52 billion-$58 billion for 2025. Our financial strength enables us to navigate this cycle effectively, including our ability to invest countercyclically and to maintain our spending priorities to create shareholder value, including our discipline approach and distribution to shareholders. We need to take into consideration also that we need to be prepared. We have seen two additional asks for us to increase our production. Compared to January through March, we are 400.
In anticipation that we might be called upon to continue to increase our production, we need also to ensure that this capacity that we have of 12 million barrels is readily available, as we have always highlighted. Yeah, the market is adjusting, but we are also picking additional barrels.
Thank you.
Thanks a lot. The next question is from Michele Del la Vigna of Goldman Sachs.
Thank you very much. Congratulations on the reliable and strong delivery. I wanted to ask you a question about capital allocation. We are seeing a lot of asset sales at the moment from big oils, especially in downstream. We're actually seeing more strategic downstream assets coming on the market than probably at any time in the last decade between lubricants, marketing, and chemicals. I was just wondering how you're thinking about these potential opportunities in the context of your capital framework, and if you think this may be the right time to make some downstream acquisitions, perhaps in the context of your CapEx flexibility. Thank you.
Thank you, Michael. We always look at M&A opportunities in key markets. That is important for us. Or getting into JVs or getting equity. We have made certain in retail business, as you know, and actually doing one now in the Philippines, and we did one in Pakistan as well, because we are aiming to place almost 500,000 of our products in key markets by 2030. It is part of the strategy. The strategy also calls for placement of our crude and liquid to chemical over the next 10 years in key markets. We are looking at 4 million barrels of liquid to chemical. That opened a lot of opportunities for investment with a lot of partners. Looking at markets where they are short or the demand is there.
For example, liquids-to-chemicals, China is representing a great opportunity because China is 50% of the chemical market, and they are looking for self-sufficiency by 2027. We want to place our barrels on that market where the demand is and the customers are. We are always exploring for opportunities based on our strategic fit and attractive return and with strict capital discipline. We have done it, if you remember, for lubricants in first quarter 2023. We did 10% of Rongsheng in third quarter 2023. As I said, we did a number of retail acquisitions or JVs lately. We have a number currently under evaluation in the pipeline in different markets, as long as it is within our that meets our strategy.
Thanks, Michelle.
Thank you.
Thanks a lot. The next question is from Henri Patricot of UBS. Go ahead, Henrie.
Yes, thank you, Peter. Hello, everyone. Two questions, please. The first one, following up on the question around CapEx and the impact of the additional oil production this year, given the recent OPEC+ decision. Can you elaborate on the impact for Aramco in terms of activity and CapEx? It sounded like we shouldn't expect CapEx to be below the range for this year. Could it be towards the upper end of the range, given this extra drilling potentially this year? Secondly, on the gas production side, indeed, good to see the extra disclosure this year and the growth in the first quarter of 6%. I was wondering what we should expect for the rest of the year with Jafurah starting up. When can we see a further acceleration of this growth? Thank you.
Yeah, thank you, Henri. With regard to our capital, we still maintain, as I highlighted earlier, the guidance of $52 billion-$58 billion. It is premature at this stage with all the elements of negotiation for tariffs and the impact on the global economy to make any adjustment. We do have the flexible capital available for us with priorities if the need arises. For the time being, as I said, we are disciplined. Discipline means also we capture opportunities during a low cycle. We are maintaining our guidance. With regard to, as I said earlier, production increase, we are ready to max up to our maximum sustained capacity with no impact on our capital. When we talk about 12 million barrels, it is readily available. We can put it in matters of weeks if required. The decision now is to put that gradually.
We have seen 400. We will see what will be coming over the next couple of months in terms of any additional production. We are maintaining the guidance as is for the time being, and we will update you in August after we see and assist the market and what happens. The other thing with regard to gas, a lot of our spending is on gas. We are, as I said in previous calls, we will be increasing our gas by more than 60% by 2030. We are making a number of additions. Energy Tenerife Gas Plant should be coming on stream this year at 2.6 billion scf. We are making an expansion in Fadhili. We had made an expansion earlier in Hawiyah. Right now, Jafurah phase one will be on stream this year, toward the end of this year. Phase two should be on stream by 2027.
We should be at full capacity of 2 billion sales gas by 2030. As we highlighted before, the benefit of Jafura compared to other gas plants is the liquid. It has 630,000 of liquid, gas liquid and condensate, and 430 million scf of ethane. That distinguishes Jafurah from other increments like in Haradh, South Ghawar, Hawiyah Gas Plant expansions. All of these are important. They add to our portfolio. Jafurah is exceptional because of the amount of gas liquid and condensate and associated ethane with it.
Thank you. How long, Henri? If I can just also take the opportunity when you're talking around the impact of the MSC. We were talking around the increase in volumes during the second quarter from OPEC+. There are two tranches of around 0.2 million barrels a day. Each of those 0.2 million barrels a day would add, on an annualized basis, once those are in production, around $1.9 billion of net income or operating cash flow. That's at $60 a barrel. That is in line with the rules of thumb that we provide. Remember, we also talked in the last results around last year's average prices, each 1 million barrels a day being $12 billion of incremental cash flow. Just to remind people of the upside near-term from the increases in the second quarter.
Also, one important item I want to, the Hawiyah gas reservoir storage is really helping us during high demand in the summer. We injected during the winter almost 1.5 billion scf per day, and we reproduced 2 billion scf during the summer. Added to our portfolio, this is one of the biggest gas storage facilities globally.
Okay. Henrie, thank you for that. The next question is from Kim Fustier of HSBC. Go ahead, Kim. Kim, can you hear us?
Kim, your line is open. Please proceed with your question. We are not receiving any audio from their line, so we will have to move on to the next question.
Thank you, Charlie. Perhaps we can keep Kim on the line, and we'll move to the next person in the queue, which is Alastair Syme of Citi. Alastair, go ahead. Alastair?
Alastair, your line is open.
Okay. This is unusual. We'll go to the next one, and then we'll come back to you.
Can you hear me?
Oh, yeah. Yes, hi. We can. Yes, indeed.
Apologies. It was my end. Two questions. Just picking back up on the summer burn issue again. You referenced the Hawiyah gas plant. I mean, you do not disclose the amount of crude burn you do in the summer. Can you confirm whether you are seeing a decreasing trend, i.e., is there enough gas-fired power to replace the high consumption and consumption growth in electricity? The second question is, I mean, your insights on global oil markets are very useful. Can you talk about the demand picture you are seeing in April and May? Do you think we are still run rating at that kind of 1.7 million barrel a day level? Thank you.
Thank you, Alastair. With regard to crude burning, definitely we are seeing a decreasing trend. As we said earlier, by 2030, with the introduction of 100 GW-130 GW of renewable and gas, more than 60% buildup in gas, which is all used in the Kingdom, we will be able to replace close to 1 million barrels of liquid burning. That was highlighted earlier. That was the purpose of the buildup on gas and utilization. All of the gas is being utilized in the Kingdom to eliminate liquid burning. We anticipate more than 50% of the elimination of liquid burning will come from introduction of gas, and the rest will be coming from the introduction of renewables. Of course, that will eliminate liquid burning and also meet the additional demand that we see in electricity.
It is gradually phasing out liquid burning, and we are seeing the first impact of that this year and last year. It is gradual until we reach our capacity increase that we are building for. With regard to the global market, yeah, we are seeing almost, as we highlighted, 1.7 million barrels of addition in the first quarter compared to first quarter of 2024. The fundamental is very strong. So far that second quarter for 2025 is we are seeing still resilient growth despite the impact of tariffs and the uncertainty that we are seeing in the market. China, most of the demand that we see is in Asia. There is an increase also in demand that we are seeing in the U.S., especially in transportation fuel. We are seeing more buildup for liquid to chemical. More of the liquid is going there.
China is still at 17.4 million barrels per day, which is significant. It is steady in spite of the impact of the tariffs on the economy. We are seeing still a steady demand that is coming from China, from India. We anticipate, depending on what is the outcome of all of these negotiations, that we will still see a steady growth in 2025.
That's great insight. Thank you very much.
Thanks, Alastair. The next one we'll go to is Irene Himona at Bernstein.
Thank you very much. First, a question on gas, if I may. The 1 million barrel a day equivalent capacity by 2030, you have referred to it as a double-digit business in the past. Can you say roughly what share of your upstream capital expenditure is dedicated to gas, please? Then secondly, on the Q1 results, working capital builds in the quarter. Is there any guidance for Q2? Should we expect that to reverse, for example? Thank you.
For the first part, the split is in the short term, 60% we said upstream, 30% downstream, 10% new energies. Your question is about the split between oil and gas. Depending on the quarters or the year, we are seeing more pickup on gas. I would say slightly gas is more than 50% compared to oil, depending on what happened in the rest of the year, if we are going to pick up on oil production to reach certain levels. Right now, it's slightly above 50% for gas, and the rest is oil. With regard to your second question on the guidance.
Irene, could you repeat the second question?
I think she's asking about the second quarter guidance for capital. Would it be any different from the first quarter in terms of we have $13.4 billion for the first quarter? Is that your question?
Yes, sorry. I was asking about the working capital. There was a build of $2 billion in the cash flow. $2 billion in the quarter.
Yeah. Actually, most of that was actually from receivables. While inventories went down because the oil price at the end of the quarter was lower than it had been at the end of the fourth quarter, a lot of our invoices, especially in February, were done at higher prices. We saw a build in receivables. You should normally expect those to reverse. In a way, I hope they do not. I hope we get a capital build in the second quarter because that means that the oil prices are moving up. Other things being equal, that is what you should expect.
Thank you very much.
The next question, if we can have another try with you, Kim, if you're on the line. Apologies for missing you earlier.
Yeah. Hi. Good afternoon. Can you hear me now?
We can indeed. Hi, Kim. Go ahead.
Great. Thank you. Apologies for the technical issues earlier. I had two questions, please. The first one was on the downstream. Last month, you signed an agreement to potentially expand the Yasref petrochemical plant together with Sinopec. When would you expect to take FID on that project? More generally, could you remind us of your thinking and the rationale when it comes to investing in domestic refining and petrochemical capacity versus international capacity? Just on the OPEC production increases for May and June, would you be able to say from which fields or which areas you would expect that incremental production from your side to come from and from which sort of grades between lights, mediums, and heavies? Thank you.
Thank you, Kim. The agreement with Sinopec, which was announced lately, it is about expanding the refinery to have more of a mixed steam cracker with about 1.8 million ton per year capacity and also 1.5 million ton per year aromatic complex. This is a framework agreement right now. We will need to do full engineering before we get to FID. We are talking about a couple of years before we start executing that construction until we complete the full engineering of that plant. FID will all depend on completing an engineering for that major upgrade. Our strategy with regard to investment in the Kingdom, we are looking at our existing assets and seeing we are not doing a grassroots. We are looking at existing assets and seeing how we can maximize value by doing certain upgrades with our partners. Basically, we are looking at a number of assets.
One is this with Sinopec. We're looking at SAMREF with ExxonMobil. We're looking at SATORP, and we brought Rongsheng as a partner to see how we can upgrade also that asset and make it more profitable by increasing complexity and the yield from that asset. This is our strategy, looking at what we have and what needs to do to upgrade it. With regard to our distribution, it's not a big increase for us, 400,000 out of a 3 billion of spare capacity. The distribution depends on the priorities. We look at the different grade of crudes to maximize based on our profitability from each of the grades and our customer needs. We do have availability when you talk about 3 million barrels on light, extra light, medium, and heavy.
Depending on markets and customer needs and placement, as we invest in more assets globally, these placements require certain grade types. It does not really change our diet big as we are still 400,000. As we grow that, we will be seeing more of the others. It all depends on, it is not only profitability, profitability is one item, but it is also where we are placing it and what is the diet of the assets that we are trying to place these barrels into. It is a combination of all of these things. We do have the flexibility in all grades.
Thank you.
Thank you, Kim. We have two more questions on the line at the moment. Just a reminder, if there's anybody who's still to poll, please do so quite quickly. The next question is from Matt Lofting at JP Morgan. Matt, go ahead.
Thanks for taking the questions. Two if I could, please. First, I just wanted to follow up on demand. I think, I mean, you said in your opening remarks quite rightly that probably too early to preempt or fully assess the potential impact on demand looking forward. I just wonder, though, when you look into the second half of the year, if you could perhaps share for investors some of the key indicators and reference points that you think that we should best look at in order to assess the effect, if there is any of trade and tariffs as we move through the second half. Secondly, I wanted to ask about the balance sheet and gearing ratio, obviously Aramco's balance sheet, one of the biggest and deepest that investors can find.
The gearing ratios, having been below your 5%-15% range, is now moved up to the sort of the bottom end with macroeconomic uncertainty prevailing globally. Is there any implication for moving into the range in terms of a sort of a greater urgency to sort of stay at that low end and look to preserve headroom, or are you comfortable that you can continue to manage across a range of gearing scenarios and thresholds? Thank you.
Okay. Thank you, Matt. I'll take the first question. Yeah, I will answer the second question with regard to the gearing. As I said earlier, we are for the first quarter, we've seen a significant increase compared to the first quarter of 2024. The rest of the year, it all depends on what happens. Honestly, lower prices also increase demand in certain areas. For example, we're seeing more pickup on transportation in the U.S. as a result of the lower prices. We are seeing also our liquids-to-chemicals portfolio. There is an increase in liquids-to-chemicals. The number of assets that we are looking at in the pipeline for liquids-to-chemicals is increasing as China is trying to have self-sufficiency. The lower prices also put a cap on lowering the demand.
We do not see a significant impact from our customer with regard to the demand from the market. We are hoping that with the stimulus package, that most of the demand, by the way, even though there is a pickup in the U.S., comes from Asia. With the big stimulus package that we have seen in China and the pickup also that we see in the rest of Asia, we expect, as I said earlier, that demand will continue to be steady and growing compared to 2024. If the whole issue around tariffs is resolved, we had some news today about certain agreements between the U.S. and China. We will see what will happen. That also will add to additional demand that we will be seeing from the market. Not a major impact, even though these tariffs created a lot of noise.
It did not really impact because you have to look at all the segments. It's not only manufacturing that requires our product. It's transportation. It's liquids-to-chemicals. It's jet. We're seeing big pickup on jet fuel. Significant pickup. We are almost at 8. We expect the first half of this year at 7.9. Second half, we're expecting 8.1 million barrels. That compared to the first half of 2024, it was at 7.5. That's a pickup of 600,000 just in jet fuel. Transport fuel in general is growing. It's at six-year high. It's at 65 million barrels per day. Demand, as we see it, is steady depending on the agreements that we will see and what will happen between China and the U.S. If they reach an agreement, we will see more steady growth.
On your second question, Matt, on gearing ratio, we moved away from the specific 5%-15% balance sheet gearing ratio. Like we explained, we manage kind of gearing and our financial strength across the cycles. We're in a business that or an industry that has a price cycle of around five to seven years. We manage the gearing of the company so that we deliver significantly during good times, which you saw us do over the past three and a half years or three years ago until last year. We started levering up as promised to target a more optimum capital structure, again, to increase shareholder value. We're still continuing to gradually lever up the company with that objective. As you can see from our balance sheet, we remain at very, very low gearing ratio. We will continue that drive.
That's kind of how to think about it. We do have a financial profile that benefits a lot from strong free cash flows. It's a little bit more difficult than you think to lever up the company. Our cash flow priorities remain the same. First and foremost, sustaining CapEx, and then the base dividend, which is sustainable and progressive, and then gross CapEx, including external dividends, and then additional distribution in the form of performance-linked dividends and/or deleveraging if we are moving in that direction. Right now, we're levering up the company again to target a more optimum capital structure.
Super. Thanks all.
Thanks, Matt. Okay. If I can call on Sasha of Bank of America to ask the last question of the afternoon for us.
Yes. Thank you, Peter. Yes, thanks, Peter. Thank you for the presentation and the opportunity to ask questions. I have two questions. The first one is with regards to your realized crude price. I think it was around $76.3 per barrel in Q1, Brent average close to $75. You had a slight premium. Just wondering how that's panning out in Q2, given all of the disruptions we are seeing since April. That's the first question. The second question is on your clean energy, blue ammonia targets. Obviously, on the last earnings call, you did scale back, and you guided for a new target of 2.5 million tons. We've seen a lot of global oil and energy companies cut back, and we're seeing more and more cancellations when it comes to blue and green hydrogen. Wondering how the progress has been on your front there.
Any update would be appreciated. Thank you.
Thank you, Sasha . I will take the second question. Ziad will answer the first with regard to blue ammonia. Yeah, we adjusted. Before, we had an 11 million ton by 2030. We always said from the beginning, a couple of years back, we have always said we will only start construction when there is an offtake. We have always reiterated that the offtake is hard to come considering the cost is $200-$400, depending if you want green or blue hydrogen. However, the answer that we have heard from our customers in certain markets is that there is an appetite for green and blue hydrogen. We were making sure that we are ready to provide that to the market at the lowest cost compared to our competitors globally, especially in blue hydrogen because of our gas availability.
It's at the lowest cost compared to others. For green hydrogen, because the cost for solar or wind renewables to produce green hydrogen is one of the lowest in the world, also here in the Kingdom. We have the intensity of the sun and the wind and all of the right ingredients to produce green hydrogen. However, we are seeing that the cancellation did not come from the producers. The cancellation came and the retract came from the customers. They kept adjusting their requirements for the green and blue hydrogen, and we adjusted our requirements. The good thing is we did not do any construction. Some did construction, and then they had to cancel or reimburse their facility or shut them down or whatever. We decided from the beginning that we will not start building these facilities until we see the offtake materializing.
Materializing now, we have adjusted it to 2.5 million tons of blue ammonia. We will see. We expect that, hopefully, that will come from certain countries because that's not a big quantities, by the way. This is very small quantities compared to our earlier ambition of 11 million tons. Even the 11 million tons, it's not a big quantities if we're talking about introducing hydrogen to the market. However, we will see. We will not start constructing, as I said, even for the 2.5 until we see the offtake materializing. We will update you if we sign an offtake. You will hear it in the news for sure. With regard to your first question about the—I don't know if you want to take okay.
Yeah. Sasha , on your first questions, of course, we do not provide forward-looking views on prices, but two things. One is rule of thumb. Before that, we focus actually on our reliability, our operations, and our ability to take advantage of increases in demand with the spare capacity that Amin referred to earlier. As Amin referred to, every 100,000 barrels of additional production at current prices gives us about $1 billion- $1.1 billion annually. On prices, the rule of thumb is every incremental dollar impacts annual net income by about $0.9 billion. With our size and our spare capacity, we focus on our reliability, our readiness to take advantage as demand increases.
Thanks, Sasha . You're absolutely right. We don't give forward-forward guidance. You can see the OSPs on a monthly basis. We publish that on the website. You can track that as we go through the quarter. We did have a premium in the first quarter. That's the more typical position for us to have. As I say, you can track that as we go ahead. Each quarter, it's always a month in arrears. We don't give forward guidance.
Okay. Thanks, Sasha . With that one, that's the end of our question and answer session. I'd like to thank everybody for participating today, particularly for those who asked questions. I'd like to thank Amin and Ziad for joining us today. As ever, if you have any further questions, please never hesitate to contact us in investor relations with any follow-up. Thank you very much indeed.