Saudi Aramco, the oil giant, makes an historic $161B profit for 2022
DUBAI, United Arab Emirates (AP) — Oil giant Saudi Aramco reported Sunday earning $161 billion last year, claiming the highest-ever recorded annual profit by a publicly listed company and drawing immediate criticism from activists.
The firm’s record-breaking profit, formerly known as the Saudi Arabian Oil Co. was due to rising energy prices after Russia’s war against Ukraine in February 2022. There were also sanctions that restricted the sale of Moscow’s oil and natural gas on Western markets.
Aramco is also hoping to increase its production to benefit from market demand when China reenters global markets after lifting coronavirus restraints. This could help raise billions for Crown Prince Mohammed bin Salman’s plans to build futuristic cities to steer Saudi Arabia away oil.
These plans are made despite growing international concern about the impact of burning fossil fuels on climate change. Meanwhile, Washington’s higher energy prices have already caused tension between Riyadh & Washington as well as increased inflation around the world.
“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 Aramco CEO and President Amin H. Nasser said in a statement.
Comparing to 2021 results of $110 Billion, profits rose 46.5% It earned $49 billion in 2020 When the world was facing the worst of the coronavirus lockdown, travel disruptions occurred oil prices briefly going negative.
Aramco stated that its crude production was approximately 11.5 million barrels each day in 2022. It also said that it hopes to reach 13,000,000 barrels per hour by 2027.
It will spend up to $55 billion on capital projects this year to increase its production.
Aramco also declared $19.5 billion in dividends for the fourth quarter 2022. This dividend will be paid in this year’s first quarter.
Aramco’s results can be seen as a gauge for the global market in energy. U.K. energy giant BP,America’s Exxon Mobil, Shell In 2022, and other companies. However, the profit of $161 billion was greater than its previous results.
Benchmark Brent crude oil trades at around $82 per barrel. Prices had reached more than $120 per barrel back in June. Aramco’s fortunes are dependent on global energy prices. announced a record $42.4 billion profit in the third quarter of 2022 This price rise was a major factor in the decline of the stock market.
These high prices have also strained relations between the United States of America and the kingdom. The United States is a traditional security guarantor to the Gulf Arab countries amid tensions in Iran. Before the November midterm elections, the kingdom said the Biden administration sought to delay a decision by OPEC and allies including Russia to cut production that could have kept gasoline prices lower for voters — making public the typically behind-the-scenes negotiations common in the region.
President Joe Biden had warned the kingdom that “there’s going to be some consequences for what they’ve done” in terms of oil prices. But, these consequences have not yet been seen. Saudi Arabia and Iran went to China to strike a diplomatic deal Friday. U.S. gasoline prices are now at an average of $3.47 per gallon. That’s just one dollar lower than last year.
The kingdom can benefit from higher crude oil prices to fuel Prince Mohammed’s visions, including his $500 billion futuristic desert city project known as Neom.
These revenues can also be used to fund Riyadh Air. Prince Mohammed announced the launch of Riyadh Air on Sunday. Riyadh Air will operate under the kingdom’s Public Investment Fund. It plans to fly to more than 100 destinations by 2030. The Wall Street Journal reported that Saudi Arabia may buy up to $35B worth of planes from Boeing Co.
But they are also against climate activists’ fears, especially as UN COP28 climate talks begin in November in the neighbouring United Arab Emirates.
Saudi Arabia, along with Russia and China, has committed to net-zero carbon emissions by 2060. However, its plans for achieving that goal are still unclear. Aramco’s earnings report noted it started a $1.5 billion Sustainability Fund in October and plans a carbon-capture-and-storage facility as well.
Amnesty International’s secretary-general, Agnès Callamard, criticized Aramco’s annual profit coming amid global concerns about climate change.
“It is shocking for a company to make a profit of more than $161 billion in a single year through the sale of fossil fuel — the single largest driver of the climate crisis,” she said in a statement. “It is all the more shocking because this surplus was amassed during a global cost-of-living crisis and aided by the increase in energy prices resulting from Russia’s war of aggression against Ukraine.”
Callamard also pointed out that Saudi Arabia continues to be one of the most prolific executioners on the planet, while at the same time being stuck in a decades-long war in Yemen and crackingdown against dissent.
“These extraordinary profits, and any future income derived from Aramco, should not be deployed to finance human rights abuses, cover them up, or try and gloss over them,” she said.
Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude. According to the Institute of International Finance, Saudi Arabia can make $40 billion more for every $10 increase in oil prices.
Aramco shares traded at $8.74 on Riyadh’s Tadawul stock market. This is a decrease from the $11.55 per share that Aramco earned last year. However, that current price still gives Aramco a valuation of $1.9 trillion — making it the world’s second most valuable company behind only Apple.
The vast majority of the shares are still held by the Saudi government. Saudi Aramco publicly listed a sliver of its worth back in late 2019.
Aramco will release Monday’s comprehensive earnings report.
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