Aramco, Saudi Oil Giant, Reports Record Net Income For 2022

Key Highlights

• Saudi Aramco, the world’s largest oil company, has reported a record net income of $161.1 billion for 2022, the largest annual profit ever achieved by an oil and gas company.
• Aramco’s CEO has warned about persistent underinvestment in the hydrocarbons sector and encouraged more investment to meet future demand.

Saudi Arabia’s state-controlled oil giant, Aramco, reported a record net income of $161.1 billion for 2022, marking the largest annual profit ever achieved by an oil and gas company. The results were bolstered by soaring oil and gas prices through last year, higher sales volumes, and improved margins for refined products. 

Free cash flow reached a record $148.5 billion in 2022, compared with $107.5 billion in 2021. The company reaffirmed its plans to increase maximum production capacity to 13 million barrels per day by 2027, with capital expenditure expected to rise to $45 billion to $55 billion in the coming years.

Risks of Underinvestment

Aramco CEO, Amin Nasser, warned about the risks of underinvestment in the hydrocarbons sector, citing the persistent underinvestment as a real risk to the industry and contributing to higher energy prices. He urged industry stakeholders to avail additional investment to increase the amount in the sector, meeting future demand. The company is also investing in new lower-carbon technologies to reduce emissions in its operations and for end users of its products.

As the chair of the influential OPEC+ producers’ alliance, Saudi Arabia has led the group’s efforts to collectively reduce their output targets by 2 million barrels per day, sparking a war of words with Washington. However, Aramco is cautiously optimistic about the future of the oil and gas industry, with a potential increase in demand from China, pickup in jet fuels, and limited spare capacity, leading to a tightly balanced market.

In response to a question about the resumption of diplomatic relations between Saudi Arabia and Iran, Nasser said that the deal would enhance regional stability, positively impacting the global market. The company also announced a 4% increase in its fourth-quarter dividend to $19.5 billion, to be paid in the first quarter of 2023, with the issuance of bonus shares to eligible shareholders.