Global oil giants ExxonMobil and Chevron are expected to rake in almost $100 billion in combined profits from 2022 due to a conflict in Eastern Europe, but Nigeria’s national oil company is missing out on the windfalls.
Despite 2022 being a year of profit bonanza for oil major and oil countries, Africa’s biggest oil producers missed its oil revenue target by 64.3 percent in 11 months (January-November); dividends from the Nigeria LNG were also down by 30.7 percent to N101.7 billion, compared to a target of N146.79 billion.
The yearly earnings of Exxon and Chevron are expected to be at record highs. Exxon is set to report as much as $56 billion in profit for 2022, while Chevron’s earnings are projected to exceed $37 billion, according to estimates compiled by S&P Capital IQ cited by the Financial Times.
Further findings showed Exxon and Chevron’s quarterly earnings after the Russian invasion of Ukraine were already an indication that the yearly profits for 2022 would be at record highs.
Chevron posted its highest-ever quarterly profits ($11.4 billion) for the second quarter, thanks to high oil and gas prices and tight fuel markets driving multi-year high refining margins. For Q3, Chevron recorded its second-highest quarterly profit ($11.2 billion) ever on the back of increased oil and gas demand and increased US production. Exxon booked a record $19.66 billion profit for Q3, beating the previous record of $17.9 billion in the previous quarter.
Chevron is “on track to beat” in 2022 its free cash flow record from 2021, chief financial officer Pierre Breber said on the Q3 earnings call in October.
Chevron said last month its 2023 organic capex would be $14 billion for 2023, consistent with its “long-term plans to safely deliver higher returns and lower carbon,” according to chairman and CEO Mike Wirth.
“Our capex budgets remain in line with prior guidance despite inflation,” Wirth said. “We’re winning back investors with capital efficient growth, a strong balance sheet, and more cash returned to shareholders.”
Exxon’s corporate plan through 2027, unveiled in December, maintains annual capital expenditures at $20-$25 billion, while growing lower-emissions investments to around $17 billion. Investments in 2023 are expected to be in the range of $23 billion to $25 billion to help increase supply to meet global demand.
“We view our success as an ‘and’ equation, one in which we can produce the energy and products society needs – and – be a leader in reducing greenhouse gas emissions from our own operations and also those from other companies,” said chairman and CEO Darren Woods.
Even if they raise investments in clean energy solutions, both super majors say they would continue to deliver oil and gas as the world will still run on fossil fuels for years, and decades, to come.
“The windfalls the international oil companies are reporting are because of increased efficiency and stable oil production unlike Nigeria struggling with opaque subsidy, rising crude theft and struggling oil fields,” Joe Nwakwue, a former chair of the Society of Petroleum Engineers, said.
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Economists are forecasting that the country could record unprecedented revenue underperformance this year.
“Although almost all the key revenue lines underperformed relative to the budget, one of the primary sources of the revenue shortfall was the FGN’s independent revenue,” economists at FBNQuest Capital said in a note sent to BusinessDay.
As of November 2022, the federal government’s retained revenue was N5.8 trillion, a 5.3 percent decline from the pro-rata target of N6.1 trillion for the 11-month period.
BusinessDay findings showed the government’s actual independent revenue was down by around 32.8 percent to N1.3 trillion, compared to a target of N1.9 trillion in the period under review.
“One thing that is clear to any discerning person is that the next president must find a way to increase revenues and cut out wasteful spending,” said Taiwo Oyedele, partner and head of tax and regulatory services at PwC Nigeria.