On Sunday, Saudi Arabian oil giant Aramco announced that it had recorded a net profit of $161.1 billion for 2022, a 46 per cent increase from the previous year. The increase in profits was attributed to higher energy prices, increased volumes sold, and improved margins for refined products. The profits are nearly triple that of Exxon's $56 billion and more than that of Google, Amazon, Tesla and Microsoft combined for the same time period.
This announcement comes after similar reports from international peers such as BP, Shell, and Chevron, which have mostly posted record profits for last year. Oil prices in 2022 experienced a wild swing, climbing on geopolitical worries amid the war in Ukraine, then sliding on weaker demand from top importer China and worries of a global economic contraction.
"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," Aramco's chief executive Amin Nasser said in the results statement.
To address these challenges, Aramco is investing in new lower-carbon technologies that have the potential to achieve additional emission reductions. The company's plans to increase crude production capacity to 13 million barrels per dayby 2027 are also on track, according to the statement.
Aramco's capital expenditure rose 18 per centto $37.6 billion in 2022, and the company expects this year's spending to be around $45.0 billion to $55.0 billion, including external investments. The board declared a dividend of $19.5 billion for the fourth quarter, an increase of 4 per centfrom the previous quarter, and recommended issuing bonus shares, with eligible shareholders receiving one share for every 10 shares owned.
In 2022, Aramco's free cash flow hit a new high of $148.5 billion, a significant increase from the previous year's $107.5 billion. The surge in cash flow is attributable to higher energy prices, increased sales volumes, and better margins for refined products.
Last year in March, oil prices skyrocketed as a result of Russia's invasion of Ukraine, which disrupted global crude flows. The international benchmark Brent reached its highest level since 2008, peaking at $139.13 a barrel. However, in the latter half of the year, prices cooled rapidly due to central banks hiking interest rates and concerns about an impending recession.
Last year, the OPEC+ alliance of producers, with Saudi Arabia at the forefront, made a decision to decrease output by 2 million barrels per day from November until the close of 2023 to stabilize the market. Despite heavy criticism from the United States and other Western countries, market dynamics have shown the cuts to be prudent, with oil prices hovering near $80 a barrel from highs of above $100 in 2022.
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