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Aramco has announced that it is ramping up capital expenditure in 2022 to US$40-50bn, compared with US$31.9bn in 2021, to boost production in response to increased global demand

aramcoresultsAramco is ramping up capital expenditure to between US$40-50bn. (Image source: Aramco)

Reporting its 2021 financial results, Aramco announced that it will continue to raise crude oil Maximum Sustainable Capacity (MSC) to 13mn bpd  by 2027, and potentially increase gas production by more than 50% by 2030. In its Downstream business, the company plans to expand its liquids to chemicals capacity to up to 4mn bpd. Aramco also intends to develop a significant hydrogen export capability and become a global leader in Carbon Capture and Storage (CCS).

In addition, the company 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. This includes an aim to reach near-zero Upstream methane emissions by 2030.

Aramco’s net income increased by 124% to US$110.0bn in 2021, compared to US$49.0bn 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, according to the company. Aramco declared a dividend of US$18.8bn for the fourth quarter, to be paid in Q1 2022. 

Commenting on the results, Aramco president & CEO Amin H. Nasser, said, “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.

“Although economic conditions have improved considerably, the outlook remains uncertain due to various macro-economic 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 programme 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.”

Capital expenditure in 2021 was US$31.9bn, an increase of 18% from 2020, primarily driven by increased activities in relation to crude oil increments, Tanajib Gas Plant and development drilling programmes. Aramco expects 2022 capital expenditure to be approximately US$40-50bn, with further growth expected until around the middle of the decade, reflecting the company’s belief that substantial new investment is required to meet demand growth, against a broader decline in upstream investment across the industry globally.

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

In recent weeks Saudi Arabia has come under pressure from western governments to up production to end their reliance on Russian oil and gas, with UK Prime Minister Boris Johnson visiting the Kingdom in mid-March with this aim. Oil prices soared to their highest level since 2008 following Russia’s invasion of Ukraine, although they have since fallen back to around US$107/bbl. 

OPEC is due to meet at the end of March to fix output levels.