Buoyed by higher crude oil prices, stronger refining margins, and the stronger chemicals business, Saudi Arabia’s majority-owned state-owned firm, Saudi Aramco has announced a 2021 net profit of $110 billion, an amount twice the size of Nigeria’s 2022 budget, indicating how a well-run oil company can provide a lifeline to an economy.
In a season where Nigerian counterpart, the Nigerian National Petroleum Corporation (NNPC) limited, is unable to bail out Nigeria’s troubled economy bogged down by subsidies, Saudi Aramco’s 2021 net income increased by 124percent to $110 billion in 2021, compared to $49 billion in 2020.
“Our strong results are a testament to our financial discipline, flexibility through evolving market conditions and steadfast focus on our long-term growth strategy, which targets value growth for our shareholders,” Aramco CEO Amin Nasser said in an investor conference on Sunday.
Capital expenditure in 2021 was $31.9 billion, an increase of 18% from 2020, primarily driven by increased activities in relation to crude oil increments, the Tanajib Gas Plant and development drilling programs.
Aramco expects 2022 capital expenditure to be approximately $40-50 billion, with further growth expected until around the middle of the decade.
Aramco also declared a fourth-quarter dividend of $18.8 billion, to be paid in the first quarter of 2022. The dividend is covered by a rise in free-cash-flow to $107.5 billion in 2021, compared to $49.1 billion in 2020.
Aramco said it would recommend that $4 billion in retained earnings be used to pay bonus shares to investors, subject to approval. Under the recommendation, shareholders would receive one bonus share for every 10 shares owned. As a result, the total dividend for 2021 is $75 billion in cash, in addition to bonus shares.
The profit figures are a stark contrast from the company’s 2020 earnings, which saw a 44percent drop on the previous year due to demand collapse brought on by the coronavirus pandemic.
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Nasser at the time described Aramco’s 2020 financial year as one of its most “challenging years” in recent history.
The company also said it would invest to increase crude oil production capacity to 13 million barrels per day by 2027, expand its liquid to chemical production, and look to increase gas production by more than 50percent by 2030.
Aramco has also said it wants to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly-owned operating assets by 2050. Scope 1 refers to direct emissions from sources owned or controlled by the company, while Scope 2 covers indirect emissions from the generation of purchased power consumed by the company.
“We’re doing our part, but it’s not enough. Other players in the industry also need to do their part and increase investment,” Nasser said, saying demand for oil will continue to accelerate in coming years.
For most Nigerians who have seen it all in the form of rising inflation, two recessions, and an unemployment rate at the highest levels on record, they would be wishing they are in Saudi Arabia’s shoes with the higher dividend from its state-owned oil corporation.
In 2021, NNPC limited incurred an expense of N1.43 trillion on behalf of the Federal government for an expense called Under-Recovery.
Aside from the payment of subsidy, the company has also had to deal with declining oil production, high oil production costs, making the country unable to enjoy oil proceeds, despite the increasing international oil prices.
