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Saudi Arabia’s state-controlled oil giant Aramco on Sunday reported a record net income of $161.1 billion for 2022 — the biggest annual profit ever achieved by an oil and gas company.
Aramco said net income increased 46.5 percent over the 12 months, from $110 billion in 2021. Free money flow also reached a record $148.5 billion in 2022, compared with $107.5 billion in 2021.
The outcomes are nearly triple the profit that western oil major ExxonMobil posted for 2022, bolstered by soaring oil and gas prices through last 12 months, together with higher sale volumes and improved margins for refined products.
“Aramco delivered record financial performance in 2022, as oil prices strengthened resulting from increased demand around the globe,” Aramco CEO Amin Nasser said in a press statement.
Oil and gas prices surged firstly of last 12 months, with western sanctions on Russia for its invasion of Ukraine steadily tightening access to Moscow’s supplies, particularly seaborne crude and oil products.
Oil prices have since pulled back greater than 25% year-on-year, with hot inflation and rising rates of interest overshadowing a more bullish demand outlook from China. Brent and WTI prices fell 6% last week alone. Brent last traded at around $80 dollars per barrel.
Aramco raised its fourth-quarter dividend by 4% to $19.5 billion, to be paid in the primary quarter of 2023. Aramco also said it could issue bonus shares to eligible shareholders because of this.
Underinvestment risk
Nasser also used the outcomes release to repeat his warning about “persistent underinvestment” within the hydrocarbons sector.
“Provided that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real, including contributing to higher energy prices,” Nasser said on Sunday, echoing comments made during a recent interview with CNBC.
At each a ministerial and Aramco level, Saudi Arabia has been a proponent of avoiding short-term fuel shortages through the twin funding of fossil fuel supplies and the green transition. CEO Amin Nasser on March 3 told CNBC that a “persistent underinvestment in oil upstream and even downstream remains to be there,” signaling potential growth demand from the aviation sector and the reopening of China.
Aramco said average hydrocarbon production last 12 months was 13.6 million barrels of oil equivalent per day, including 11.5 million barrels per day of total liquids. Saudi Arabia most recently produced 10.39 million barrels per day of crude oil in January, the International Energy Agency present in the February issue of its Oil Market Report.
As chair of the influential OPEC+ producers’ alliance, Saudi Arabia has been leading by example the group’s efforts to collectively reduce their output targets by 2 million barrels per day, agreed in October and reaffirmed at technical and ministerial meetings since. The group’s move towards limiting supply availabilities has put OPEC+ at odds with some international consumers, sparking a confrontation with Washington towards the tip of the last 12 months, as U.S. President Joe Biden’s administration stressed the necessity to easing the burden on households.
Growth horizon
The corporate reaffirmed it could proceed to take a position to extend its maximum production capability to 13 million barrels a day by 2027.
Capital expenditure rose by 18% to $37.6 billion last 12 months, and is predicted to extend to $45 billion to $55 billion in the approaching years, anticipating increases “until across the middle of the last decade.”
“Our focus will not be only on expanding oil, gas and chemicals production, but in addition investing in recent lower-carbon technologies with potential to realize additional emission reductions in our own operations and for end users of our products,” Nasser said.
