Saudi oil giant Aramco announced on Sunday record profits in 2022 thanks to soaring crude oil prices, drawing criticism in the midst of a climate and energy crisis. The company, which is largely owned by the Saudi state, posted a net profit of $161.1 billion last year, up 46% year-on-year, according to a statement issued to the Riyadh Stock Exchange.
Strong earnings growth
The CEO of the company, Amin Nasser, welcomed the “record financial performance in 2022” due to the surge in oil prices, against the backdrop of a strong recovery in global demand and the war in Ukraine. These are the highest profits for Aramco since the 1.7% listing of its shares on the Saudi Stock Exchange in December 2019.
Criticism from environmental organizations
As with majors Shell, Chevron, ExxonMobil, TotalEnergies and BP, which have posted record profits of $151 billion in 2022, Aramco’s results have not failed to cause a reaction. “It is shocking that a company is making more than $161 billion in profits in one year through the sale of fossil fuels, the main driver of the climate crisis,” lamented Amnesty International Secretary General Agnes Callamard in a statement. “This is all the more shocking because this surplus was amassed in the midst of a global cost-of-living crisis compounded by rising energy prices,” she added.
The human rights organization called on the Gulf monarchy to use these profits, “the largest ever made by a company in a year,” it said, to fund the energy transition. The world’s largest exporter of crude oil has pledged to become carbon neutral by 2060, without abandoning investments in fossil fuels, prompting skepticism from environmental organizations.
Investments to reduce greenhouse gas emissions
Aramco launched in 2022 “the largest capital program in its history,” increasing its capital spending by 18 percent to $37.6 billion, Amin Nasser said in the statement. Aramco has set a goal of reducing greenhouse gas emissions to net zero at its manufacturing facilities by 2050. This target does not take into account the emissions produced by Saudi oil consumers abroad.
High oil prices for 2023
Black gold prices have seen a sharp decline since the peaks of 2022, but analysts expect them to remain high this year. The production cut approved last October by OPEC+ is one of the factors supporting the oil market. This decision was severely criticized by Washington at the time. Robert Mogielnicki of the Arab Gulf States Institute think tank in Washington, D.C., predicts that Aramco’s performance will not be as good as last year, but it should remain strong.
Saudi Arabia’s dependence on oil
Aramco’s profits have fueled Saudi Arabia’s growth, with GDP rising 8.7% in 2022, according to official estimates. However, Saudi Arabia is seeking to diversify its economy to reduce its dependence on oil. The world’s largest crude exporter recently welcomed a jump in non-hydrocarbon activity in the fourth quarter of 2022, but growth was driven by government spending that is still tied to some extent to oil revenues. Justin Alexander, director of Khalij Economics, emphasizes Aramco’s central role in the Arab world’s largest economy.
