Saudi state oil company Aramco, the world's largest, has again posted a "record" after announcing on Sunday net revenues of $48.4bn in the second quarter of 2022, driven by higher energy prices due to the war in Ukraine and strong energy demand in the wake of the covid pandemic.
According to a company statement, this is a 22.7 per cent increase in revenue compared to the first quarter of the year ($39.5 billion), and a trend that the company expects to continue to rise as it anticipates "continued oil demand for the remainder of the decade, despite negative economic pressures on near-term forecasts". As such, Saudi Aramco has nearly doubled its profits by posting net income of $87.9 billion in the first half of 2022 compared to $47.2 billion in the same period last year, the note said. Those figures represent a 90 per cent increase from the first six months of the previous year and are "a new record quarterly profit since going public in 2019".
"These results are primarily due to higher crude oil prices and volumes sold, and increased profit margins in refining," it added. The statement stressed that Saudi Aramco "continues to work towards increasing its maximum sustainable crude oil production capacity from 12 million to 13 million barrels per day by 2027", and that the company "maintained its strong track record in supply reliability, with crude oil and other product deliveries reaching 99.8 per cent in the second quarter of 2022."
Aramco is the world's most important and strategic oil company, accounting for 10% of global crude oil production, and the largest supplier to Asia and Europe, and is the company that invests the most in production and refining facilities. Its investments include giant projects for the technological modernisation of the production process and energy transition, although it considers that the world will remain dependent on fossil fuels for decades to come. In this context, the company's chief executive, Amin Nasser, said in the statement that he was hopeful that "oil demand will continue to grow for the rest of the decade, despite negative economic pressures on the near-term global outlook".
"Our record results for the second quarter reflect increased demand for our products, especially as we are a low-cost supplier and one of the least carbon-intensive providers of exploration and production in the energy sector," Nasser said. "Despite continued global market volatility, there is a need for increased investment in the energy sector to help ensure markets remain well supplied and facilitate an orderly energy transition," he added. The Saudi company, one of the world's most valuable companies by stock price, said in the document that it will pay out an estimated $18.8 billion in dividends in the third quarter.
It also announced that its second-quarter free cash flow rose 53% year-on-year to $34.6bn, bringing it to $65.2bn for the first six months of the year, up from $22.6bn and $40.9bn, respectively, for the same two periods in 2021. "This increase is primarily due to higher cash flow from operating activities," the note added.
Record oil prices as a result of Russia's war in Ukraine and strong post-pandemic demand are expected to give even more upside to Saudi Aramco as it takes advantage of the juncture to position itself even better in the market and continue its upside.