BusinessDay

Aramco, Petrobras beat profit expectation in Q3 as NNPC struggles with old woes

Some state oil companies who have released their 2022 third-quarter results are reporting oil results bonanza, but for Nigeria’s state oil company it’s old tales of subsidies and inefficient operation.

Saudi Aramco, the world’s biggest oil firm in terms of both production and market capitalization, said that its third-quarter net income jumped by 39 percent year over year to $42.4 billion, while free cash flow surged to a record $45.0 billion from $28.7 billion for the third quarter of 2021.

The profit from this past quarter is Aramco’s second-highest as a listed company, following the record $48.4 billion net income for the second quarter this year.

“While global crude oil prices during this period were affected by continued economic uncertainty, our long term view is that oil demand will continue to grow for the rest of the decade given the world’s need for more affordable and reliable energy,” Aramco’s president and CEO Amin Nasser said, commenting on the Q3 results.

The top executive of the Saudi state oil giant also noted that “Against the backdrop of global underinvestment in our sector, we are extending our long-term oil and gas production capabilities while also working towards our previously stated ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions from our wholly-owned operated assets.”

Aramco declared a cash dividend of $18.76 billion for the third quarter, in line with its dividend policy to pay shareholders, the biggest of which with 98percent is the Kingdom of Saudi Arabia.

Also, Brazil’s Petrobras has posted a net profit of 46 billion reais ($9 billion), down from the previous quarter but up 48percent on the same period of last year.

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Petroleo Brasileiro SA, as it is formally known, has been a cash cow for its investors in recent quarters, including the Brazilian government, which owns a controlling stake in the company.

Petrobras said it will distribute about 44 billion reais ($8.5 billion) in dividends, prompting some criticism in Brazil that rewarding shareholders on this scale will undermine investment capacity.

Petrobras’ capital expenditure of $7 billion for the first nine months of 2022 is running 14percent higher than in the same period of last year.

Adjusted quarterly earnings before interest, taxes, depreciation and amortisation rose 50.5percent year on year to 91.4 billion reais.

On the other hand, Aramco and Petrobras’s counterpart, Nigerian National Petroleum Corporation (NNPC) Limited, is not only unable to bail out Nigeria’s troubled economy but has also not been able to make remittances to the Federation Account due to its huge subsidy spending on petrol.

In its latest report to the Federation Account Allocation Committee, FAAC, NNPC Ltd disclosed that it deducted N448.78 bn in August 2022 for petrol subsidy payment.

Checks on the company’s previous reports to FAAC also disclosed that in July it deducted N447.93 billion with payment for petrol subsidy costing the federation N319.17 billion, pipeline operations, repairs and management cost N8.35 billion while strategic holding cost was N989.74 million.

Also in June 2022, a total of N451.86 billion was deducted with petrol subsidy accounting for N327.06 billion, pipeline operations, repairs and management cost N158.3 million, and strategic holding cost N339.9 million.