Saudi Aramco reported record profits of $161bn in 2022 and increased its quarterly payout to shareholders to almost $20bn as the largely state-owned oil company cashed in on a tumultuous year in energy markets.
The Saudi Arabian producer said on Sunday that it sold more oil than in 2021, improved refining margins and benefited from strong crude prices, which helped net income to rise 47 per cent to its highest since the company began publishing results after listing in 2019.
The huge profits, which chief executive Amin Nasser described as “probably the highest net income ever reported in the corporate world”, complete a record set of earnings for the world’s biggest oil and gas companies after fossil fuel prices soared following Russia’s invasion of Ukraine.
Shell recorded 2022 earnings of almost $40bn, the highest in its 115-year history, while ExxonMobil made profits of $55.7bn, a record for a western oil company.
Saudi Aramco is the world’s biggest crude producer and one of the few companies with excess production capacity that can be used by the Saudi Arabian government to increase or decrease supply in line with global demand. It increased output through 2022 before Saudi Arabia, in partnership with other members of the Opec cartel, defied US pressure and cut production in November in response to what it said at the time was a weaker outlook for demand.
However, Nasser said on Sunday that he expected resurgent crude consumption in China and increased global demand for jet fuel owing to more air travel would leave the oil market “tightly balanced” this year.
“It will be difficult to balance all of that considering that . . . we don’t see enough investment going into the market now,” Nasser said.
Saudi Aramco is one of the few companies investing in increasing its production capacity, from almost 12mn barrels a day to 13mn. Many rivals have slowed investment in oil supply as they seek to reduce their emissions.
The company’s total capital expenditure in 2022 was up 18 per cent year on year, at $37.6bn, compared with $24.8bn spent by Shell. Saudi Aramco expects to spend $45bn to $55bn in 2023, in what Nasser described as a continuation of “the largest capital spending programme in [Aramco’s] history”.
Free cash flow from operations was $148.5bn, compared with $107.5bn in 2021.
On the back of its record profits Aramco increased its dividend, one of the biggest payouts in the world, by 4 per cent for the fourth quarter to $19.5bn, to be paid by the end of March.
The payment is a vital source of revenue for the Saudi Arabian government, which directly owns more than 94 per cent of Saudi Aramco stock. It listed slightly less than 2 per cent of the company’s shares in December 2019 and passed another 4 per cent to the Saudi sovereign wealth fund in 2022.
Last year, Saudi Aramco produced 11.5mn barrels a day of crude oil and other liquids, representing about 10 per cent of the world’s crude supply.
Western sanctions on Russia, including a ban on oil imports into the EU, have led to an increased flow of discounted Russian crude into China and India over the past 12 months. Despite the shift in trade flows, Nasser said that Saudi Aramco had been able to maintain prices for its crude in Asia and had not lost market share.
The company’s long-term relationships with buyers in India and China and its record as a reliable supplier meant that Saudi Aramco had retained a “healthy call on our oil production from these markets despite the Russian crude increasing”, he said.
