Saudi Aramco Shoots Up 46% to an Amazing $161 Billion Profit in 2022 as Oil Demand Surge
- 13-Mar-2023 11:05 AM
- Journalist: Gabreilla Figueroa
Riyadh: Saudi Arabian Oil Co., more commonly known as Saudi Aramco, is a major player in the energy industry and its success has been underpinned by soaring net profits. In 2022, the company saw an impressive 46.46% increase in net profit to SR604.01 billion ($161 billion). This was thanks to higher oil prices, increased volumes of products sold and better refined product margins.
The total comprehensive income also grew by 48.15% compared to 2021, making it even more successful year for Saudi Aramco. In 2021, Saudi Aramco's total net profit was reported at SR412.4 billion - already a significant amount but surpassed by 2022's figures.
Amin H Nasser, President and CEO of Aramco, commented on the financial results saying: “Aramco delivered a record financial performance in 2022, as oil prices strengthened due to increased demand around the world. We also continued to focus on our long-term strategy, building both capacity and capability across the value chain with the aim of addressing energy security and sustainability.”
Saudi Aramco reported a 4.0 percent increase in its total cash dividend for the fourth quarter of 2022, with a total cash dividend of SR73.15 billion being paid out to shareholders in the first quarter of 2023. Additionally, bonus shares are to be given to eligible shareholders. The news was released in a statement made to Saudi Stock Exchange (Tadawul).
“The Board of Directors also recommended the distribution of bonus shares to eligible shareholders in the amount of one share for every 10 shares held, subject to required Extraordinary General Assembly and regulatory approvals,” stated Aramco in the statement.
Amidst a year of fierce competition and challenging circumstances, Aramco achieved remarkable success in 2022. Total revenue surged 49 percent to reach an incredible SR2 trillion, compared to the $1.3 trillion seen in 2021.
CEO Nasser noted that their focus in 2022 was about more than simply expanding oil, gas and chemicals production - they have also invested in new lower-Carbon technologies that have the potential to reduce emissions not only within their own operations, but also for those utilizing their products.
In addition to this impressive feat, capital expenditure also increased by 18 percent when compared with 2021 - culminating in total outlay of SR141.19 billion.
“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. To leverage our unique advantages at scale and be part of the global solution, Aramco has embarked on the largest capital spending program in its history, and last year our capex rose by 18.0 percent to reach $37.6 billion,” stated Nasser.
In its statement, Aramco anticipated capital expenditure to be within the range of SR168 billion and SR206 billion, including external investments. Furthermore, Aramco reported that its free cash flow for 2022 hit a record of SR557 billion - higher than the SR401 billion figure from 2021.
Oil prices saw a dramatic shift in 2022, with an initial surge in March 2020 as Russia invaded Ukraine, driving Brent up to $139.13 per barrel - the highest it had been since 2008. However, this surge quickly subsided as central banks began to raise interest rates and fears of economic recession set in. Despite this tumultuous climate, Saudi Aramco managed to report record profits for 2022 according to their latest statement. The company also outlined their highlights for the year, noting major successes during 2022 despite the global economic disruptions.
Aramco recently reported that its Hydrocarbon production was 13.6 million barrels of oil equivalent per day, including 11.5 million barrels per day of total liquids. The company is working to fulfil the Kingdom’s goal of increasing Aramco's crude oil MSC to 13.0 mmbpd by 2027 and is actively executing growth plans to promote long-term productivity from Saudi Arabia's oil resources.
Aramco recently announced the completion of an energy infrastructure deal in February 2022, resulting in a consortium of investors led by BlackRock Real Assets and Hassana Investment Company acquiring a 49 percent stake in Aramco Gas Pipelines Company (AGPC), for $15.5 billion.
The construction and engineering activities for the Marjan and Berri crude oil increments are also continuing to progress. By 2025, these increments are expected to increase Aramco's production capacity by 300,000 barrels per day and 250,000 bpd respectively.
Aramco has reiterated its commitment to invest in increasing its maximum production capacity to 13 million barrels a day by 2027. The company has also announced that it has set up a $1.5 billion Sustainability Fund to invest in the technology needed for a stable and inclusive energy transition. This move shows Aramco's dedication to sustainability efforts.
Aramco and the Ministry of Energy have joined forces to create one of the world's largest Carbon capture and storage hubs in Jubail, Saudi Arabia. The agreement, signed earlier in November 2022, will enable the hub to store up to 9 million tons of Carbon Dioxide a year by 2027. With this initiative, both parties are aiming to reduce the country's dependence on fossil fuels while keeping it environmentally safe.