Saudi Aramco has smashed its quarterly profit record set in May as rising energy prices fueled by Russia’s invasion of Ukraine provide big profits for oil producers.
But the chief executive of the state-controlled firm warned that excess capacity remained limited as demand picked up, with pandemic restrictions expected to ease in China, the world’s second-biggest oil consumer .
Net income rose to $48.4 billion in the second quarter, a 90% year-on-year increase and the group’s highest revenue since listing in 2019.
The Saudi oil company kept its dividend unchanged at $18.8 billion in the third quarter as it worked to expand oil and gas production. The company said it had limited production capacity to ramp up output and that it would reach 12.3 million barrels per day by 2025.
“While global market volatility and economic uncertainty remain, events in the first half of this year support our view that continued investment in our industry is essential,” said Amin Nasser, CEO representative of Saudi Aramco.
Western countries have pushed Saudi Arabia, the de facto leader of OPEC, to increase output to offset higher prices, but the kingdom has said it would only do so if demand increases.
Nasser told reporters on Sunday that demand was “healthy” but warned there was little excess capacity after a period of low investment in the industry.
“With the easing of Covid restrictions in China, this will increase demand … the aviation industry will also increase demand,” he said.
Saudi Arabia, the world’s largest oil exporter, has a production capacity of 12 million b/d, a figure Saudi Aramco could quickly reach if the government directs it, Nasser said. The company’s capital spending rose 8 percent to $16.9 billion in the first half of the year compared with the same period in 2021, and would rise gradually through 2025, he added.
The world’s top oil producers, including ExxonMobil, Chevron and BP, posted big gains after a surge in commodity prices fueled by the Ukraine war and a post-pandemic demand pick-up. Most have increased payouts to shareholders.
recommended
High profits are putting increasing political pressure on oil majors as high energy prices threaten to trigger a public pushback. US President Joe Biden said in June that Exxon was making “more money than God”.
Brent crude, the international benchmark, has fallen from $120 a barrel in June to close to $98 on Friday. Shares in Riyadh-listed Saudi Aramco are up more than 25 percent this year. The government listed 1.7 percent of the oil company’s shares in 2019.
Responding to US and Western pressure for increased oil production, OPEC has warned of “very limited availability of excess capacity” after years of underinvestment across the industry.
Nasser said it would take years to “bring in robust additional capacity.”
He added: “We are deeply concerned about the lack of investment; even now with higher prices, you only see short-term investments in the market.”
Earlier this month, OPEC and its allies agreed to one of the smallest oil production increases in the group’s history, with Saudi Arabia working to appease its Western allies without using up its unused capacity .