Saudi Arabia’s state oil company Aramco on March 20 pledged to increase the amount it invests in oil production after it reported that profits more than doubled year-on-year to $110 billion.
The world’s largest oil exporter said its net profit increased by 124 percent to $110 billion in 2021, compared with $49 billion a year prior.
In an effort to boost production and meet growing demand, Aramco said it would ramp up capital expenditure to $40–50 billion, “with further growth expected until around the middle of the decade.”
Capital expenditure in 2021 was $31.9 billion, an 18 percent increase from 2020.
“This is in line with the company’s belief that substantial new investment is required to meet demand growth, against a broader decline in upstream investment across the industry globally,” the company said.
The company said it would also raise its crude oil “maximum sustainable capacity” to 13 million barrels a day by 2027, and potentially raise gas production by more than 50 percent by 2030.
Its average hydrocarbon production was 12.3 million barrels of oil equivalent per day in 2021, including 9.2 million bpd of crude oil.
“Our strong results are a testament to our financial discipline, flexibility through evolving market conditions and steadfast focus on our long-term growth strategy,” said Aramco CEO Amin Nasser.
Nasser noted that while economic conditions have “improved considerably,” the outlook for oil demand remains uncertain “due to various macro-economic and geopolitical factors.”
However, Aramco’s investment plan “aims to tap into rising long-term demand for reliable, affordable, and ever more secure and sustainable energy,” he said.
“We recognize that energy security is paramount for billions of people around the world, which is why we continue to make progress on increasing our crude oil production capacity, executing our gas expansion program, and increasing our liquids to chemicals capacity,” Nasser added.
Oil prices increased more than 50 percent in 2021 amid a surge in demand as economies across the globe emerged from lockdowns and restrictions imposed due to the COVID-19 pandemic.
In February, oil prices surged above the $100 per barrel mark, reaching 14-year highs after Russian President Vladimir Putin announced the launch of military action against Ukraine.
In response, Western nations have called on major oil producers to increase output amid concerns that energy prices—already at sky-high levels—could be further exacerbated due to their reliance on Russian supplies.
According to the United States Energy Information Administration, Russia is the third-largest producer of oil globally after the United States and China. Russia has 11 percent of the world’s total market share, while the United States has 20 percent.
A number of EU countries, such as Germany and the Czech Republic, also have a high reliance on Russian natural gas, and Russia remained the largest supplier of natural gas and petroleum oils to the EU in 2021, according to Eurostat.
Given that Saudi Arabia is by far the largest producer in the Organization of the Petroleum Exporting Countries (OPEC), the plan to boost production will no doubt be welcomed by political leaders.
The alleged offenses ranged from joining terrorist groups, to holding “deviant beliefs,” the interior ministry said in a statement.
Saudi Arabia denies accusations of human rights abuses.
Asked on Sunday if Aramco would pump more oil to fill any gaps in the supply market due to the ongoing conflict in Ukraine, Nasser said it would produce according to guidelines from the Saudi energy ministry, Reuters reported.
Elsewhere on Sunday, Aramco said it planned to develop a “significant hydrogen export capability” and become a “global leader in carbon capture and storage technology.”
The company also said it would pay shareholders a dividend of $18.8 billion in the first quarter of 2022 while it also plans to distribute $4 billion in retained earnings to investors due to its strong 2021 earning performance, although this is subject to required Extraordinary General Assembly and regulatory approvals.
Aramco’s shares rose over 4 percent in early trade on Sunday to 43.85 riyals, valuing the company at 8.76 trillion riyals ($2.34 trillion).
