Saudi Aramco reports $110bn in net income for 2021, up 124% year-on-year

The Saudi Arabian Oil Company (Aramco) has reported a net income of $110bn for the full year of 2021, up 124 per cent compared to $49bn in 2020.

The increase in net income reflects higher crude oil prices, stronger refining and chemicals margins, and the consolidation of SABIC’s full-year results, a statement said. Its gearing ratio at the end of 2021 stood at 14.2 per cent, down from 23 per cent at the end of 2020.

Aramco also declared a fourth quarter dividend of $18.8bn, to be paid in the first quarter of 2022. The board of directors recommended $4bn in retained earnings be capitalised and bonus shares be distributed to shareholders, subject to required approvals.

Under the recommendation, shareholders would be granted one bonus share for every ten shares owned with the total 2021 dividend amounting to $75bn in cash, in addition to bonus shares.

The #aramco 2021 financial results demonstrate the resilience and success of our long-term growth strategy#AramcoResults

— aramco (@aramco) March 20, 2022

Capital expenditure in 2021 was $31.9bn, an increase of 18 per cent from 2020, driven by activities related to crude oil increments, Tanajib Gas Plant and development drilling programmes.

The expected 2022 capital expenditure is to be approximately $40-50bn. In December, Aramco signed a lease and leaseback deal involving its gas pipeline network with a consortium of investors led by BlackRock Real Assets and Hassana Investment Company – who acquired a 49 per cent stake in Aramco Gas Pipelines Company, with Aramco receiving upfront proceeds of $15.5bn.

Read: Aramco closes $15.5bn BlackRock-led gas pipeline deal

Earlier in 2021, Aramco also closed a deal for its oil pipeline network with another international investor consortium, including EIG Global Energy Partners and Mubadala. The consortium acquired a 49 per cent stake in Aramco Oil Pipelines Company, a subsidiary of Aramco, for $12.4bn.

Aramco also raised $6bn in the second quarter of 2021, as it diversified access to capital through the issuance of three tranches of US dollar-denominated Shari’a-compliant Sukuk trust certificates.

Read: Aramco sells $6bn of dollar-denominated Islamic bonds

In addition, the oil giant is targeting investment in renewable energy and nature-based solutions, as it pursues its ambition of achieving net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly-owned operated assets by 2050.

Aramco President and CEO Amin H. Nasser, said: “Although economic conditions have improved considerably, the outlook remains uncertain due to various macroeconomic and geopolitical factors. But our investment plan aims to tap into rising long-term demand for reliable, affordable and ever more secure and sustainable energy.

“We recognise that energy security is paramount for billions of people around the world, which is why we continue to make progress on increasing our crude oil production capacity, executing our gas expansion program and increasing our liquids to chemicals capacity. We are also investing in CCS, renewables and low-carbon hydrogen production – supporting the global energy transition and advancing our net-zero ambition.”

In 2021, Aramco’s average hydrocarbon production was 12.3 million barrels of oil equivalent per day (mmboed), including 9.2 mmbpd of crude oil.

It also announced its growth strategy, which in its upstream business includes continuing to raise crude oil Maximum Sustainable Capacity (MSC) to 13 million barrels per day (mmbpd) by 2027, and potentially increasing gas production by more than 50 per cent by 2030. In its downstream business, Aramco plans to expand its liquids to chemicals capacity to up to 4 mmbpd and also intends to develop a significant hydrogen export capability.

In November, Aramco commenced development of the Jafurah unconventional gas field, the largest non-associated gas field in the kingdom. By 2030, it is expected to reach a sustainable gas rate of two billion standard cubic feet per day (bscfd) of natural gas.