An employee inspects a Saudi Aramco oil facility in Abqaiq, Saudi Arabia on October 12, 2019.
Maxim Shemetov | Reuters
Saudi Arabian oil giant Aramco reported a sharp increase in profit for the year on Sunday, reporting a more than doubling in year-over-year net income to $110 billion.
Aramco’s 2021 net income increased 124% to $110 billion in 2021 from $49 billion in 2020, driven by higher crude oil prices, higher refining and chemicals margins, and the consolidation of its SABIC chemicals business for year.
The numbers were in line with expectations, with analysts polled by Reuters forecasting net income of $109.7 billion for the full year. Shares rose 4% on Sunday on the news, according to data from Reuters.
“Our strong results are a testament to our financial discipline, flexibility in a changing market environment and continued focus on our long-term growth strategy, which is focused on increasing value for our shareholders,” Aramco CEO Amin Nasser said in the results report.
raging oil
Aramco has benefited from a rise in oil prices in 2021, with international benchmark Brent oil rising above $80 a barrel by the end of the year, up about 50% over a 12-month period. Supply shortages have been added to a range of complex factors causing great uncertainty in the energy and raw materials complex even before Russia’s invasion of Ukraine.
“While economic conditions have improved significantly, the outlook remains uncertain due to various macroeconomic and geopolitical factors,” he added.
Aramco also announced a fourth-quarter dividend of $18.8 billion due in the first quarter of 2022. Dividends are covered by an increase in free cash flow to $107.5 billion in 2021 from $49.1 billion in 2020.
Aramco said it would recommend that $4 billion of retained earnings be used to pay out bonus shares to investors, subject to approval. According to the recommendation, shareholders will receive one bonus share for every 10 shares they own. This brings the total dividend for 2021 to $75 billion in cash, on top of bonus shares.
Increase in capital costs
The company also said it will invest in increasing crude oil production capacity to 13 million barrels per day by 2027, expanding liquefied petroleum production to chemical production, and aims to increase gas production by more than 50% by 2030.
Aramco also said it wants to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions by 2050 at its fully operating assets. Category 1 refers to direct emissions from sources owned or controlled by the company, while group 2 covers indirect emissions. from the generation of purchased electricity consumed by the company.
Capital expenditure in 2021 was US$31.9 billion, up 18% from 2020, mainly driven by expansion of crude oil growth, the Tanajib Gas Plant and production drilling programs. Aramco expects capital expenditures to be approximately $40-50 billion in 2022, with further growth expected until about the middle of the decade.
The numbers contrast sharply with the company’s 2020 profit, which fell 44% from the previous year due to a collapse in demand caused by the coronavirus pandemic.
Nasser at the time described Aramco’s 2020 fiscal year as one of the most “challenging” in recent history.