Soaring crude prices have catapulted Saudi Aramco, the world’s largest oil exporter, to a net income of $48.4 billion for the second quarter, almost 90% higher than the $25.5 billion profit made in the same period last year.
“The results set a new quarterly earnings record for the company since its Initial Public Offering in 2019, and were primarily driven by higher crude oil prices and volumes sold and higher refining margins,” the Saudi Arabian state-owned giant said in a statement on Sunday.
Amin Nasser, Aramco chief executive, said the company’s “record second-quarter results reflect increasing demand” for its products — particularly as a low-cost producer with one of the lowest upstream carbon intensities in the industry.
“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential — both to help ensure markets remain well supplied and to facilitate an orderly energy transition,” Nasser said.
The Aramco boss said the company expects “oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts”.
Nasser noted the company is progressing through the largest capital programme in its history, and its approach is aimed at investing “in the reliable energy and petrochemicals that the world needs while developing lower-carbon solutions that can contribute to the broader energy transition”.
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Higher capital expenditure
Aramco said the company’s capital expenditure increased by 25% to $9.4 billion in the second quarter and by 8% to $16.9 billion for the first half of 2022, compared to the same periods in 2021.
“Aramco continues to invest to capture growth opportunities, progressing the strategic integration of its upstream and downstream segments, expanding its chemicals business and developing prospects in low-carbon businesses,” it added.
The company’s free cash flow increased by 53% to $34.6 billion in the second quarter, while the Q2 dividend stood at $18.8 billion to be paid in the third quarter this year.
“The company continues to strengthen its balance sheet to maintain a high investment grade credit rating across market cycles,” Aramco said.
In addition, the company distributed bonus shares to shareholders in the second quarter, at a rate of one share for every 10 shares held.
Aramco demonstrated reported average total hydrocarbon production of 13.6 million barrels of oil equivalent per day in the second quarter of 2022.
It plans to scale up production capacity, with oil output alone expected to rise to 13 million barrels per day from its current 12 million bpd by 2027.
Among its key development projects, Aramco has highlighted progress towards its Jafurah gas plant.
“[The] expansion programme is progressing towards increasing production with initial construction and design of the Jafurah Gas Plant ongoing,” the company noted.
Aramco said the Jafurah gas plant “has a planned processing capacity of 3.1 billion cubic feet per day of raw gas, expected to be completed in two phases by 2027″.
The Jafurah field is expected to commence production in 2025 and will gradually increase natural gas deliveries to reach a sustainable rate of 2 Bcfd by 2030, which will provide feedstock for hydrogen and ammonia production and will help meet expected growing local energy demand, Aramco added.
The company said, “construction of the Hawiyah Unayzah gas reservoir storage has reached an advanced stage, with the injection phase nearing completion”.
“This is expected to provide up to 2 Bcfd of natural gas to be injected into the Master Gas System by 2024,” Aramco said.