Meed | Aramco’s bumper profits will fuel record spending

Aramco’s bumper profits will fuel record spending

20 March 2023

Commentary

Indrajit Sen

Oil & gas editor

High oil and gas prices helped Saudi Aramco register a net income of $161.1bn in 2022, its biggest ever profit since listing shares on the Saudi Exchange (Tadawul) three years ago.

With the favourable oil price climate expected to persist this year, along with predictions for hydrocarbons demand to start declining in the next decade, Aramco will want to increase its oil and gas production potential swiftly.

Aramco aims to increase its maximum oil output spare capacity to 13 million barrels a day (b/d) by 2027, from about 12 million b/d currently, and to raise gas production by 50 per cent by the end of this decade.

To accomplish this target, Aramco will need to spend significantly on relevant projects. The Saudi energy giant has committed to tapping into its record profits made last year to make record capital expenditure (capex) this year.

Aramco expects 2023 capex to be $45bn-$55bn, including external investments. This projected spending level is at least 20 per cent higher than the company’s $37.6bn capex in 2022.

There are close to $20bn-worth of upstream oil and gas projects in various pre-engineering, procurement and construction (EPC) execution phases in Saudi Arabia, according to data from regional projects tracker MEED Projects, with Aramco expected to award EPC contracts for about 40 per cent of these in 2023.

Aramco will want to channel the bulk of the spending this year towards upstream projects, in line with its intention to accelerate towards its oil and gas output goals.