Saudi Aramco reported a 30 per cent increase in first-quarter earnings as higher oil prices, stronger refining, and chemicals margins offset lower production.

Saudi Arabia’s state energy group said net income in the three months to March 31 was $21.7bn, up from $16.7bn in the same quarter a year ago as the coronavirus pandemic took hold around the world. This beat analysts’ forecasts of $19.4bn.

“Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming,” said Amin Nasser, chief executive. “And while some headwinds still remain, we are well positioned to meet the world’s growing energy needs as economies start to recover.”

Free cash flow for the quarter stood at $18.3bn, which was not quite enough to cover the dividend the company will pay out for the three-month period — largely to the government — of $18.8bn.

Saudi Aramco like other listed oil majors has benefited largely from a pick-up in oil prices as demand recovers and as Opec producers led by the kingdom, the world’s biggest exporter, restrict supply to bolster markets. Saudi Arabia’s crude oil production averaged 8.6m barrels a day in the first quarter, down from 9.8m b/d a year ago.

But while its peers have slashed dividends, Saudi Aramco has been under greater pressure to maintain hefty payouts to the state, for which it is the biggest revenue earner.

The company has pledged to pay the bulk of $75bn in annual dividends to the government, alongside taxes and royalties, and it is also expected to lead a new domestic investment plan to modernise Saudi Arabia.

Saudi Aramco is also monetising its assets to raise funds as the country’s economy reels from the financial fallout of the coronavirus crisis.

Saudi Aramco said last month it had agreed to raise $12.4bn from the sale of a minority stake in a newly formed oil pipeline venture to a consortium of investors.

As the financial pressure has intensified the company cut capital expenditure sharply. It expects the figure for 2021 to be about $35bn, which is significantly lower than the planned $40bn-$45bn. Saudi Aramco has also delayed projects, suspended drilling in some areas and stalled some deal activity.

Borrowing has also surged as the company was forced to absorb the $69bn acquisition of a majority stake in Sabic, the Saudi chemicals company, from the kingdom’s Public Investment Fund at a time of a cash crunch.

Gearing, which Saudi Aramco defines as a measure of the degree to which operations are financed by debt, surged from minus 4.9 per cent in the first quarter of 2020 to 23 per cent in December. It maintained this level in the most recent three-month period.