The Aramco logo is displayed on the smartphone screen.
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Saudi Arabia’s state-controlled oil giant Aramco on Sunday reported net income of $161.1 billion for 2022 – the biggest annual profit ever achieved by an oil and gas company.
Aramco said net income rose 46.5 percent over the year, from $110 billion in 2021. Free cash flow also reached a record $148.5 billion in 2022, compared to $107.5 billion in 2021.
The result nearly tripled the profits that major ExxonMobil posted in the west for 2022, bolstered by rising oil and gas prices to last year, along with higher sales volumes and better margins for refined products.
“Aramco delivered record financial performance in 2022, as oil prices strengthened due to increased global demand,” Aramco CEO Amin Nasser said in a press statement.
Oil and gas prices rose at the start of last year, with western sanctions against Russia over its invasion of Ukraine steadily tightening access to Moscow’s supplies, particularly crude oil and marine oil products.
Oil prices have since retreated more than 25% year-to-date, with hot inflation and rising interest rates outweighing the prospect of more bullish demand from China. Brent and WTI prices fell 6% last week. Brent last traded at around $80 dollars per barrel.
Aramco raised its fourth-quarter dividend by 4% to $19.5 billion, which will be paid in the first quarter of 2023. Aramco also said it will issue bonus shares to eligible shareholders.
Risk of underinvestment
Nasser also used the results release to repeat his warning about “persistent underinvestment” in the hydrocarbon sector.
“Because we expect oil and gas to remain important for the future, the risk of underinvestment in our industry is real, including contributing to higher energy prices,” Nasser said on Sunday, referring to comments made during a recent interview with CNBC.
At the ministerial and Aramco levels, Saudi Arabia has been an advocate of avoiding short-term fuel shortages through dual financing of fossil fuel supply and green transition. CEO Amin Nasser on March 3 told CNBC that “persistent underinvestment in oil upstream and even downstream is still there,” signaling potential demand for growth from the aviation sector and China’s reopening.
Aramco said its average hydrocarbon production last year 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 found in February’s Oil Market Report.
As chairman of the influential OPEC+ producer alliance, Saudi Arabia has led by example the group’s efforts to reduce output targets by 2 million barrels per day, agreed in October and reaffirmed at technical and ministerial meetings. The group’s move to limit supply availability put OPEC+ at odds with some international consumers, sparking a war of words with Washington late last year, as US President Joe Biden’s administration stressed the need to ease the burden on households.
Growth horizon
The company reiterated that it will continue to invest to increase its maximum production capacity to 13 million barrels per day by 2027.
Capital spending rose 18% to $37.6 billion last year, and is expected to increase to $45 billion to $55 billion in the coming years, with hopes of rising “until around the middle of the decade.”
“Our focus is not only on developing the production of oil, gas and chemicals, but also investing in new low-carbon technologies with the potential to achieve additional emission reductions in our own operations and for the end users of our products,” said Nasser.