Saudi oil giant Aramco has a record $161 billion profit for 2022

Saudi Arabia’s state-controlled oil giant Aramco on Sunday reported a record net income of $161.1 billion for 2022 – the biggest annual profit ever made by an oil and gas company.

Aramco said net income rose 46.5 percent over the year, from $110 billion in 2021. Free cash flow also hit a record $148.5 billion in 2022, compared with $107.5 billion in 2021.

“This is probably the highest net income ever recorded in the corporate world,” Aramco Chief Executive Amin Nasser said on an earnings call on Sunday.

The results are almost triple the profit that oil major ExxonMobil posted for 2022, boosted by high oil and gas prices throughout last year, along with higher sales volume and improved margins for refined products.

Oil and gas prices rose in early 2022, with Western sanctions against Russia over its invasion of Ukraine steadily tightening access to Moscow’s supplies, particularly seaborne crude and oil products.

Oil prices have since retreated more than 25% year-on-year, with high inflation and rising interest rates overshadowing a more bullish demand outlook from China. Brent and WTI prices fell 6% last week alone. Brent last traded at around $80 a barrel.

“We are cautiously optimistic,” Nasser said. “If you consider China’s opening, the pick-up of jet fuel and the very limited spare capacity, we are cautiously optimistic in the short to medium term [that] markets will remain tightly balanced.”

Aramco raised its fourth-quarter dividend by 4% to $19.5 billion, payable in the first quarter of 2023. Aramco also said it would issue bonus shares to eligible shareholders as a result.

“We aim to maintain [the dividend] at this level,” Aramco Chief Financial Officer Ziad Al-Murshed told the earnings call. “We have the financial strength to go through the ups and downs of the cycle.”

Nasser also used the results to reiterate the warning of “persistent underinvestment” in the hydrocarbon sector.

“Given that we expect oil and gas to remain essential for the foreseeable future, the risk of underinvestment in our industry is real, including contributing to higher energy prices,” Nasser said Sunday, echoing comments made during a recent interview with CNBC.

Both at ministerial and Aramco levels, Saudi Arabia has been an advocate for avoiding short-term fuel shortages through dual financing of fossil fuels and the green transition.

“We’re not seeing enough investment coming into the markets right now,” he reiterated on Sunday’s call. “We are calling on the industry, policy makers, investors … to leverage further investment to really increase the volume in the sector so we can meet future demand.”

Aramco said average hydrocarbon production last year was 13.6 million barrels of oil equivalent per day, including 11.5 million barrels per day of total liquids. Saudi Arabia last produced 10.39 million barrels per day of crude oil in January, the International Energy Agency found in the February edition of its oil market report.

As chairman of the influential OPEC+ producer alliance, Saudi Arabia has led by example the group’s efforts to collectively reduce its production targets by 2 million barrels per day, agreed in October and confirmed at technical and ministerial meetings since. The group’s move to limit supply availability has put OPEC+ at odds with some international consumers, sparking a war of words with Washington late last year as US President Joe Biden’s administration stressed the need to ease the burden on households.

Longtime rivals Saudi Arabia and Iran on Friday struck a China-brokered deal to resume diplomatic relations. Iran has previously been blamed for a major attack on Aramco facilities in 2019 that caused a dramatic spike in prices and undermined the stability of global supplies. Tehran has denied involvement.

“The agreement will hopefully result in less geopolitical tension and increase regional stability, which will definitely have a positive impact on the global market,” Nasser said in response to a question about Saudi-Iranian developments.

The company reaffirmed that it will continue to invest to increase its maximum production capacity to 13 million barrels per day by 2027.

Capital spending rose 18% to $37.6 billion last year, and is expected to rise to $45 billion to $55 billion in the coming years, with increases expected “until around the middle of the decade.”

“Our focus is not only on expanding the production of oil, gas and chemicals, but also investing in new low-carbon technologies with the potential to achieve further emission reductions in our own operations and for end users of our products,” Nasser said.