Aramco Q2 profit soars to record $66 billion

RIYADH • Saudi Aramco has posted the biggest quarterly adjusted profit of any listed company globally, driven by high crude prices and production.

Aramco followed big oil rivals reporting a surge in profits. Net income rose to 181.64 billion riyals (S$66.4 billion) in the second quarter, up from 95.47 billion riyals a year earlier, the state-controlled company said yesterday.

Its profit beat a company-compiled analyst estimate of US$46.2 billion (S$63.4 billion).

Aramco chief executive officer Amin Nasser told reporters on an earnings call that global oil demand is healthy, and China's easing of Covid-19 restrictions and a pickup in the aviation industry could add to demand.

"There is healthy demand with very limited spare capacity currently available," Mr Nasser said, reiterating a call for more global investment in the hydrocarbon sector to meet future demand.

The company is using its earnings windfall to reduce debt and invest in a huge expansion of its production capacity. Aramco is betting that demand for its oil and chemicals will remain high even as the world looks to transition away from fossil fuels.

Energy companies boomed in the first half of this year. Russia's invasion of Ukraine roiled markets, sending oil prices above US$100 a barrel and causing refining margins to soar, while Aramco is benefiting from both high production and sale prices.

Firms such as Exxon Mobil and Shell made record earnings in the second quarter. This is despite heightened angst about the consequences of climate change, which triggered a wave of droughts, wildfires and floods in the northern hemisphere this summer.

Notwithstanding concerns about climate change, surging crude prices have led many Western leaders to call on Saudi Arabia to pump more oil to help tackle global inflation. United States President Joe Biden travelled to Jeddah last month to request a boost in oil output.

Yet, the Organisation of Petroleum Exporting Countries and its allies have taken only modest action. At its last meeting, the Saudi-led group agreed to an output increase of 100,000 barrels per day (bpd) as it worried about its dwindling spare capacity.

Aramco kept its quarterly dividend, a crucial source of revenue for the kingdom, unchanged at US$18.8 billion. This was unlike most Western majors, which increased payouts to shareholders.

The quarter may mark a high point for Aramco. While Brent crude averaged US$112 a barrel between April and June, it has since fallen below US$95 as the US and European economies slow and China imposes Covid-19 lockdowns.

The kingdom pumped 10.5 million bpd of crude in the second quarter and increased that figure to almost 11 million last month.

Aramco would have no problem producing 12 million bpd if asked to by the Saudi government, Mr Nasser said.

Aramco is 94 per cent state-owned. Its shares have gained 25 per cent this year, giving it a market valuation of US$2.4 trillion.

BLOOMBERG, REUTERS