Saudi Aramco, the national oil company of Saudi Arabia, announced on Sunday that its net income for the year 2022 was $161.1 billion. This marks a 47 percent increase over 2021 and a record since the company started offering shares on the local Tadawul stock exchange in 2019. The Saudi Arabian government owns almost all of Aramco’s shares, and the company generates massive sums of revenue for the state.
As the world’s largest oil company, Aramco is the latest energy giant to report record-breaking profits, betting on the continued strength of global demand for its oil despite concerns about climate change. So far, those bets are paying off. “We anticipate oil and gas will remain essential for the foreseeable future,” said Amin H. Nasser, the company’s chief executive, in a statement.
Sharing the Wealth
Reflecting the surge in earnings, Aramco announced that it would increase its fourth-quarter dividend by 4 percent over the previous year, to $19.5 billion. Overall dividends for 2022 were approximately $76 billion. The earnings of oil companies are closely tied to commodity prices, with Exxon Mobil, Chevron, and Shell all reporting their highest-ever profits, and Saudi Aramco is no exception. The average price of Brent crude, the international benchmark, rose by about 40 percent to just over $100 a barrel in 2022, compared with the previous year, mirroring the rise in profits. Saudi Aramco also benefited from higher profits for refined products such as diesel and gasoline.
Several factors contributed to higher oil prices last year, including Russia’s war in Ukraine, which has created as yet unrealized fears of oil shortages, and an increase in energy demand as much of the global economy recovered from the pandemic. The group of oil-producing countries known as OPEC Plus, led by Saudi Arabia and Russia, has also helped keep oil prices robust by restraining production. Brent crude is now selling for about $83 a barrel.
Spend money to make money
While some major Western oil companies have taken a restrained approach to new fossil fuel investments, especially as governments promote electric cars and other ways to reduce carbon emissions, Aramco is spending record amounts. Last year, its spending on capital expenditure, which mainly invests in oil and natural gas production, rose by 18 percent to $37.6 billion. Mr. Nasser reiterated a warning that a failure to invest sufficiently could lead to oil shortages and elevated prices in the future. “The risks of underinvestment in our industry are real, including contributing to higher energy prices,” he said.