ShareRIYADH: Saudi Aramco said on Sunday it achieved "record" profits totaling $161.1 billion last year, drawing an outraged response from activists warning about the ravages of climate change. The mostly state-owned energy giant, the world's second most valuable company behind Apple, said in a filing with the Saudi stock market that net income for 2022 was up 46 percent from $110 billion in 2021.
The results-the strongest since Aramco became a listed company in 2019 -- were "predominantly due to the impact of higher crude oil prices and volumes sold, and stronger refining margins," it said. Global energy prices surged after Russia invaded Ukraine in February 2022.
"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 CEO Amin Nasser said on Sunday. Aramco has pledged to achieve "operational net-zero" carbon emissions by 2050. That applies to emissions that are produced directly by Aramco's industrial sites, but not the CO2 produced when clients burn Saudi oil in their cars, power plants and furnaces.
The market would remain tightly balanced in the short to medium term, adding that he was cautiously optimistic, he said. Nasser was speaking to the press after the Saudi Arabian oil giant reported its highest ever annual profit since the company was listed. He said spare capacity remained tight at 2 million barrels per day, while demand for jet fuel was increasing alongside China's re-opening from tight Coronavirus-related restrictions.
"If you considered China opening up and a pickup in jet fuels and very limited spare capacity, we are talking 2 million barrels, so as I said we are cautiously optimistic in the short to midterm and the market will remain tightly balanced," he said.
A deal agreed between Iran and Saudi Arabia on Friday to re-establish relations after years of hostility that had threatened stability and security in the Gulf would have a positive effect on global energy markets as it promotes regional stability, Nasser said.
Aramco's crude supplies to its main Asian customers, including China and India, were not impacted by the uptick of Russian sales into Asia on the back of Western sanctions. "We have a track record of maintaining reliabitliy and an excellent customer base. It didn't impact our supply to these main markets," he said.
On recent imports of Russian diesel into Saudi Arabia, Nasser said the kingdom had always been importing products for its domestic market since before the Russian invasion of Ukraine.
Nasser said Aramco was looking globally at liquefied natural gas (LNG) market opportunities, when asked about potential acquisitions in the year ahead. The company is in "active talks and discussions" in terms of LNG investments, he said without elaborating. Nasser cautioned that he still did not see enough investment to sustain demand in the long term going into the sector, saying that supply wouldn't be adequate in the mid- to long term if that trend continued.
"We need to make sure that there is additional supply in the market otherwise this tightness of supply in the mid- to long term will have an impact." Saudi Arabia has pledged to achieve net zero carbon emissions by 2060, drawing skepticism from environmental campaigners. Officials are simultaneously championing further investments in fossil fuels to ensure energy security and stave off inflation and other economic woes.
Growth 'driver'
The company's yearly net income figure is nearly double the $88.2 billion the firm pulled in in 2019, before the coronavirus pandemic. The profits fuelled overall economic growth in Saudi Arabia, the world's biggest crude exporter, which officials put at 8.7 percent in 2022, the highest rate in the G20.
Under Crown Prince Mohammed bin Salman, the kingdom's de facto ruler, Saudi Arabia has sought both to open up and diversify its oil-reliant economy, spending heavily on much-hyped projects like a futuristic megacity known as NEOM. Officials have touted growth in non-oil activities, which increased 6.2 percent in the fourth quarter of 2022 over the same period in 2021, according to data published on Thursday by the national statistics authority.
Yet government spending "is a major driver for this growth" and that "will always be to some extent linked to oil revenue", underscoring Aramco's central role in the economy, said Justin Alexander, director of the consultancy Khalij Economics. Energy prices are expected to stay elevated in 2023, in part because of production cuts approved last October by the OPEC+ cartel that Riyadh co-leads with Moscow-a move harshly criticized by Washington. Aramco floated 1.7 percent of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world's biggest initial public offering. - AFP
