Saudi Aramco announces highest-ever annual profit for a public company, which activists have criticized.
Oil giant Saudi Aramco has reported making $161 billion last year, claiming the highest-ever recorded annual profit by a publicly traded company and drawing direct criticism from activists.
The monster profits of the company, formally known as Saudi Arabian Oil Co., came on the back of soaring energy prices after Russia launched its war against Ukraine in February 2022, with sanctions restricting sales of Moscow’s oil and natural gas in Western markets. .
Aramco also hopes to increase production to capitalize on market demand as China re-enters the global market after lifting coronavirus restrictions. That could provide the billions needed to pay for Saudi Crown Prince Mohammed bin Salman’s plans to develop futuristic cityscapes to steer Saudi Arabia away from oil.
However, those plans come despite growing international concerns about fossil fuel burning accelerating climate change. Meanwhile, higher energy prices have already strained relations between Riyadh and Washington and pushed up inflation worldwide.
“As we expect oil and gas to remain essential for the foreseeable future, the risks of underinvestment in our industry are real – including contributing to higher energy prices,” Saudi Aramco CEO and President Amin H Nasser said in a statement.
Earnings rose 46.5 percent compared to the company’s 2021 results of $110 billion. Saudi Aramco made $49 billion in 2020 as the world faced the worst lockdown of the coronavirus pandemic, travel disruptions and oil prices briefly turned negative.
Aramco estimated its crude production at about 11.5 million barrels per day in 2022 and said it hoped to reach 13 million barrels per day by 2027.
To boost that production, it plans to spend a whopping $55 billion on capital projects this year.
Aramco also announced a $19.5 billion dividend for the fourth quarter of 2022, payable in the first quarter of this year.
Aramco’s results, seen as a benchmark for the global energy market, reflect the huge profits of energy giants BP, ExxonMobil, Shell and others in 2022.
But the sheer size of the $161 billion profit eclipsed even its own previous results, as well as records set by Apple, Vodafone and the US Federal National Mortgage Association, or Fannie Mae.
Benchmark Brent crude now trades at around $82 a barrel, though prices reached over $120 a barrel in June. Aramco, whose fortunes depend on global energy prices, announced a record profit of $42.4 billion in the third quarter of 2022 thanks to that price spike.
The staggering gains drew criticism from activists concerned about climate change, especially as the United Nations’ COP28 climate talks kick off in November in the neighboring United Arab Emirates.
Saudi Arabia has pledged to have net-zero carbon emissions by 2060, as have China and Russia, though plans to achieve that goal remain unclear. Aramco’s earnings report mentioned that it started a $1.5 billion sustainability fund in October and is also planning a carbon capture and storage facility.
Agnès Callamard, secretary general of Amnesty International, criticized Aramco’s annual gains amid global concerns about climate change.
“It is shocking for a company to make more than $161 billion in profits in one year from selling fossil fuels – the biggest contributor to the climate crisis,” she said in a statement.
“It’s all the more shocking because this surplus was amassed during a global cost-of-living crisis and was aided by the rise in energy prices brought about by Russia’s offensive war against Ukraine.”
Callamard also noted that Saudi Arabia remains one of the world’s top executioners, while also remaining embroiled in a years-long war in Yemen and a crackdown on dissent.
“These extraordinary profits, and any future Aramco earnings, should not be used to fund, cover up, or attempt to cover up human rights violations,” she said.