Saudi Arabia’s state-controlled oil giant Aramco reported a record income of $161.1 billion for 2022

Saudi Arabia’s state-controlled oil giant Aramco reported a record income of $161.1 billion for 2022

Saudi Arabia’s state-controlled oil giant Aramco reported a record net income of $161.1 billion for 2022 on Sunday, making it the largest annual profit ever made by an oil and gas company.

Saudi Arabia’s state-controlled oil giant Aramco reported a record net income of $161.1 billion for 2022

Net income increased by 46.5 percent during the year, to $110 billion in 2021, according to Aramco. In 2022, free cash flow also reached a record high of $148.5 billion, up from $107.5 billion in 2021.

During a Sunday earnings call, Aramco CEO Amin Nasser stated, “This is probably the highest net income ever recorded in the corporate world.”

The results are nearly triple the profit that oil major ExxonMobil made in 2022. This is due to higher sales volumes, improved margins for refined products, and rising oil and gas prices throughout the year.

At the beginning of 2022, oil and gas prices skyrocketed as Western sanctions against Russia for its invasion of Ukraine steadily restricted access to Moscow’s supplies, particularly seaborne crude and oil products.

Oil costs have since pulled back over 25% year-on-year, with hot expansion and increasing loan fees eclipsing a more bullish interest standpoint from China. Prices for Brent and WTI both dropped 6% last week alone. Brent last traded for approximately $80 per barrel.

Nasser stated, “We are cautiously optimistic.” We are cautiously optimistic that markets will remain tightly balanced in the short to medium term, taking into account China’s opening, the increase in jet fuel prices, and the extremely limited spare capacity.

Aramco increased its dividend for the fourth quarter by 4% to $19.5 billion, which will be distributed in the first quarter of 2023. Additionally, Aramco stated that it would issue bonus shares to shareholders who met the requirements.

During the earnings call, Aramco Chief Financial Officer Ziad Al-Murshed stated, “We’re aiming to sustain [the dividend] at this level.” We have the financial resources to endure the cycle’s ups and downs.

Risk of underinvestment Nasser also made use of the results release to reiterate his warning about the hydrocarbons industry’s “persistent underinvestment.”

Nasser said on Sunday, echoing remarks made in a recent interview with CNBC, “Given 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.”

Saudi Arabia has advocated funding both fossil fuel supplies and the green transition to avoid short-term fuel shortages at the ministerial and Aramco levels.

On the Sunday call, he reiterated, “We don’t see enough investment getting into the markets right now.” We energize the business, policymakers, financial backers… to benefit extra speculation to truly expand the sum in the area, with the goal that we can fulfill future need.”

According to Aramco, the average daily production of hydrocarbons that year was 13.6 million barrels of oil equivalent, with 11.5 million barrels of total liquids. The International Energy Agency found that Saudi Arabia last produced 10.39 million barrels of crude oil per day in January, according to its Oil Market Report for February.

Saudi Arabia, as chair of the influential OPEC+ producers’ alliance, has led the group’s efforts to reduce their output targets by 2 million barrels per day, which was agreed upon in October and has been reiterated at technical and ministerial meetings since. At the end of last year, as the administration of U.S. President Joe Biden emphasized the necessity of easing the burden on households, OPEC+’s decision to limit supply availability sparked a dispute with Washington.

Iran and Saudi Arabia reached a deal on Friday to resume diplomatic relations through Chinese mediation. A major attack on Aramco’s facilities in 2019 that sent prices skyrocketing and threatened the stability of global supplies has previously been attributed to Iran. Iran has denied being involved.

“The arrangement will ideally bring about less international pressure and improve territorial strength, which will decidedly affect the worldwide market,” Nasser said in light of an inquiry regarding the Saudi-Iran advancement.
Growth potential The business reiterated that it would continue to invest in its goal of reaching 13 million barrels per day by 2027.

Last year, capital expenditures increased by 18% to $37.6 billion. In the coming years, they are anticipated to rise to $45 billion to $55 billion, with increases anticipated “until around the middle of the decade.”

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