Saudi Aramco Posting Record Profits of $161B in 2022

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Saudi Aramco, a big oil company in the United Arab Emirates, announced that it made $161 billion in profit last year due to higher prices for crude oil. This amount broke records and is really important for the country’s economy!

The Saudi Arabian Oil Company (known formally as Saudi Arabian Oil Co.) said in its report that they had made the most money that year. This was due to energy prices rising after there was a war between Russia and Ukraine in 2022, which caused some of Russia’s oil and gas not to be able to be sold in western countries.

Saudi Aramco, an oil company, wants to make more money by adding to its production. This is because Crown Prince Mohammed bin Salman wants to build cities of the future that won’t need so much oil and gas.

Unfortunately, this plan worries many people around the world because they know burning fossils fuels will cause climate change.

The CEO of Saudi Aramco, Amin H. Nasser said that if too little money is spent on the oil and gas industry, it could lead to higher energy prices in the future. Last year (2020) when the world experienced a bad coronavirus pandemic with travel disruptions and oil prices reaching zero or less, the company earned $49 billion which was 46.5% lower compared to its 2020 profit which was $110 billion.

Aramco said that in 2022, it plans to produce about 11.5 million barrels of crude oil a day and hopes to increase it to 13 million by 2027. In order to achieve this target, it will spend up to $55 billion on various projects this year. As part of these plans, Aramco has declared a dividend worth $19.5 billion for the fourth quarter of 2022 which will be paid out in the first quarter of this year.

Aramco, which is seen as a representation of the global energy market, earned huge profits in 2022 just like BP from the UK, Exxon Mobil from America, Shell and etc. Oil prices have risen to $82 per barrel which had been over $120 back in June. As Aramco’s fortunes depend on these prices, the company announced an amazing record profit of $42.4 billion in their third quarter earnings this year.

The prices of oil have caused a lot of tension between Saudi Arabia and America. Before the US elections in November, Saudi Arabia revealed that person in Biden’s team had asked OPEC countries and Russia to keep the prices low so Americans pay less for their gas. This kind of negotiation usually happens secretly, but this time it was made public.

President Joe Biden said that Saudi Arabia and Iran would have to face ‘consequences’ for their actions related to the oil prices. But, on Friday the two countries made a deal with China instead. Now, gasoline costs about $3.47 a gallon in America – which is much less than it was last year!

For the kingdom, higher prices of crude oil can help with Prince Mohammed’s plans, like his $500 billion project to build a futuristic city in the desert called Neom. But some people think that this can hurt the environment and be bad for climate change. This November, leaders will meet in the United Arab Emirates to discuss how to stop climate change.

Saudi Arabia said that by 2060 it will not be releasing any carbon dioxide. Just like China and Russia, Saudi Arabia is also working on ways to reach this goal. It recently opened a $1.5 billion Sustainability Fund and started building a facility for capturing and storing the carbon dioxide it does release into the air.

Saudi Arabia has so much oil near the surface of its deserts that it’s one of the least expensive places in the world to get crude from. If the price of a single barrel of oil rises by $10, Saudi Arabia can make an extra forty billion dollars each year, based on estimates from the Institute of International Finance.

On Sunday, Aramco’s stock price on Riyadh’s Tadawul stock exchange, was $8.74. That was lower than its highest value of $11.55 over the last year. But it still makes Aramco the world’s second-richest company right after Apple, with a worth of 1.9 trillion dollars!

The Saudi government owns most of Aramco’s shares and only made a small fraction public in 2019.

On Monday, Aramco will be sharing a report to tell us all how much money they made over the past period of time. Follow Jon Gambrell on Twitter for more information @jongambrellAP.