Saudi Aramco posts record $161bn profit on back of strong crude prices

Saudi Aramco reported record profits of $161bn in 2022 and increased its payout to shareholders as the largely state-owned oil company cashed in on a tumultuous year in energy markets.

The Saudi Arabian producer on Sunday said it sold more oil than in 2021, improved refining margins and benefited from strong crude prices, which helped net income rise 47 per cent to its highest since the company began publishing results after listing in 2019.

The huge profits complete a record set of earnings for the world’s biggest oil and gas companies after fossil fuel prices soared last year due to disruption from Russia’s full-scale invasion of Ukraine. Shell reported 2022 earnings of almost $40bn, the highest in its 115-year history, while ExxonMobil made profits of $55.7bn, the most ever 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 was a weaker outlook for demand.

Last year, it produced 11.5mn barrels a day of crude oil and other liquids, representing about 10 per cent of the world’s crude supply.

While many rivals have slowed investment in oil supply as they seek to reduce their emissions, Saudi Aramco is one of few companies investing in increasing its maximum production capacity, from 12mn barrels per day to 13mn. 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.

Amin Nasser, chief executive, said the “risks of under-investment” in oil and gas production were real and already contributing to higher prices. “To leverage our unique advantages at scale and be part of the global solution, Aramco has embarked on the largest capital spending program in its history,” he said.

Free cash flow from operations was $148.5bn, compared with $107.5bn in 2021.

On the back of 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 still directly owns 94 per cent of Saudi Aramco stock. It listed just under 2 per cent of the company’s shares in December 2019 and passed another 4 per cent to the Saudi sovereign wealth fund last year.