Menu

Aramco

Aramco 1

Saudi’s oil giant, Aramco nets $161bn

, , ,

The Saudi Arabia oil giant, Aramco, has reported it made $161 billion from its operations in 2022.

The largely state-owned oil company cashed in on a tumultuous year in energy markets that resulted in high oil prices.

The Saudi Arabian producer said it sold more oil than in 2021, improved refining margins and benefited from strong crude prices, which helped net income rise 47 per cent to its highest since the company began publishing results after listing in 2019.

But the result from Saudi Arabia was in sharp contrast to that of Nigeria, which is still struggling to meet its Organisation of Petroleum Exporting Countries (OPEC) quota, blaming this on oil theft and vandalism of its pipeline infrastructure.

Saudi Arabia currently produces over 10 million barrels per day (bpd) and has produced all of its OPEC allocation, with some spare capacity.

Aramco, made the huge profits completed a record set of earnings for the world’s biggest oil and gas companies after fossil fuel prices soared last year due to disruption from Russia’s full-scale invasion of Ukraine.

Shell reported 2022 earnings of almost $40 billion, the highest in its 115-year history, while ExxonMobil made profits of $55.7 billion, the most ever for a Western oil company.

Saudi Aramco is the world’s biggest crude producer and one of the few companies with excess production capacity that can be used by the Saudi Arabian government to increase or decrease supply in line with global demand.

 It increased output through 2022 before Saudi Arabia, in partnership with other members of OPEC cartel, defied US pressure and cut production in November in response to what it said was a weaker outlook for demand.

Last year, it produced 11.5 million barrels a day of crude oil and other liquids, representing about 10 per cent of the world’s crude supply, the FT report said.

While many rivals have slowed investment in oil supply as they seek to reduce their emissions, Saudi Aramco is one of few companies investing in increasing its maximum production capacity, from 12 million barrels per day to 13 million.

According to the Aramco results, total capital expenditure in 2022 was up 18 per cent year-on-year, at $37.6 billion, compared with $24.8 billion spent by Shell. Saudi Aramco expects to spend $45 billion to $55 billion in 2023.

Chief Executive of Aramco, Amin Nasser, was quoted as saying that the “risks of under-investment” in oil and gas production were real and already contributing to higher prices.

“To leverage our unique advantages at scale and be part of the global solution, Aramco has embarked on the largest capital spending programme in its history,” Nasser added.

Aramco’s free cash flow from operations was $148.5 billion, compared with $107.5 billion in 2021, the financial report stated. Also, on the back of record profits, Aramco increased its dividend, one of the biggest pay-outs in the world, by four per cent for the fourth quarter to $19.5 billion, to be paid by the end of March.

The payment was a vital source of revenue for the Saudi Arabian government, which still directly owns 94 per cent of Saudi Aramco stock. It listed just under two per cent of the company’s shares in December 2019 and passed another four per cent to the Saudi sovereign wealth fund last year.

Aramco’s results are consistent with record profits for 2022 reported by the five oil majors –- Shell, Chevron, ExxonMobil, BP and TotalEnergies — which surpassed $150 billion and would have been closer to $200 billion without costly withdrawals from Russia.

They also fuelled Saudi Arabia’s overall economic growth, which officials put at 8.7 per cent in 2022, the highest rate in the G20.

Energy prices are expected to stay elevated in 2023, in part because of production cuts approved last October by the OPEC+ cartel that Riyadh co-leads with Moscow, a move harshly criticised by Washington.

Published by ThisDay

fa75d41b-oil-and-gas-companies-in-nigeria

Like NNPC with Dangote Refinery, Aramco in deal to acquire stake in Reliance Industries in Saudi Arabia

0

Saudi Aramco is in advanced talks for an all-stock deal to acquire a stake in Reliance Industries Limited’s oil refining and chemicals business, people with knowledge of the matter told Bloomberg.
The Saudi Arabian firm is discussing the purchase of a roughly 20 per cent stake in the Reliance unit for about $20 billion to $25 billion-worth of Aramco shares, the people said, asking not to be identified because the information is private.
The announcement comes about two weeks after the Federal Executive Council (FEC) approved the acquisition of 20 per cent minority stakes by the Nigerian National Petroleum Corporation (NNPC) in upcoming Dangote Petroleum and Petro-Chemical Refinery.
Dangote Petroleum Refinery is a 650,000 barrels per day (BPD) integrated refinery project under construction in the Lekki Free Zone near Lagos, Nigeria. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility.
The Pipeline Infrastructure at the Dangote Petroleum Refinery is the largest anywhere in the world, with 1,100 kilometers to handle 3 Billion Standard Cubic Foot of gas per day. The Refinery alone has a 400MW Power Plant that is able to meet the total power requirement of Ibadan DisCo.
The Refinery will meet 100 per cent of the Nigerian requirement of all refined products and also have a surplus of each of these products for export.
It is designed to process Nigerian crude with the ability to also process other crudes.
Reliance, which is backed by Indian billionaire Mukesh Ambani, could reach an agreement with Aramco as soon as the coming weeks, the people said.
Shares in Reliance extended gains to as much as 2.6 per cent in Mumbai after the Bloomberg News report.
A deal would forge a closer alliance between the world’s biggest oil exporter and one of the fastest-growing consumers. Ties and trade between the two countries have grown in recent years as India looks to bolster its energy security and Saudi Arabia reduces its support for Pakistan over the disputed territory of Kashmir.
Riyadh and New Delhi elevated their relationship to a “strategic partnership” in 2019.
It would seal more than two years of negotiations and mark Aramco’s first all-stock deal since its initial public offering in 2019.
Ambani confirmed talks about a deal with an implied stake valuation of $15 billion that same year. Discussions were delayed by the onset of the coronavirus pandemic and slump in oil prices.
Energy markets have since recovered, with crude prices jumping around 35 per cent this year to almost $70 a barrel. Aramco said last week due diligence on a deal with Reliance was underway.
A transaction would boost Aramco’s sales of crude to India. For Reliance, it would help to lock in a steady supply of oil for its giant refineries and make the Indian company a shareholder in Aramco.
Based on Aramco’s market valuation of about $1.9 trillion, a transaction would give Reliance a stake of around one per cent.
Details of the potential transaction are still being negotiated, and talks could drag on longer or fall apart, the people said. A representative for Aramco declined to comment.
The Saudi government’s Center for International Communication didn’t immediately respond to an email requesting comment.
A representative for Reliance said the company does not have anything to add beyond Ambani’s comments at the shareholders’ meeting in June, when the conglomerate appointed Aramco Chairman Yasir Al-Rumayyan to the board. Ambani had said Reliance could finalize an investment deal with the oil producer this year.
More=ThisDay=

Large bundle of US dollars

Aramco plans debt market comeback with multi-tranche bond deal

, 0

By Reuters

Saudi Aramco 2222.SE said on Monday it has hired a group of banks ahead of a multi-tranche U.S. dollar-denominated bond issuance, as the world’s largest oil company seeks to raise cash amid lower oil prices.

The announcement comes as Gulf issuers show no sign of slowing this year’s blitz on international debt markets as they seek to plug finances hit by weaker oil prices and the coronavirus crisis.

Issuances from the region so far this year have already shot through last year’s record, surpassing $100 billion.

Goldman Sachs, Citi, HSBC, JPMorgan, Morgan Stanley and NCB Capital were hired to arrange investor calls starting on Monday ahead of the planned transaction, Aramco said in a bourse filing.

Other banks involved in the deal include BNP Paribas, BOC International, BofA Securities, Credit Agricole, First Abu Dhabi Bank, Mizuho, MUFG, SMBC Nikko and Societe Generale, a document issued by one of the banks on the deal showed.

The oil giant, which made its debut in the international debt markets last year when it raised $12 billion after receiving more than $100 billion in orders, did not detail the size of the proposed issuance.

It planned a benchmark multi-tranche offering consisting of three-, five-, 10-, 30- and/or 50-year tranches, subject to market conditions, the document said. Benchmark bonds are generally at least $500 million per tranche.

“The backdrop is supportive,” said a debt banker on the deal, citing a $1 billion Islamic bond issuance last week from Dubai Islamic Bank, which achieved record low yields.

Aramco needs cash to pay $37.5 billion in dividends for the second half of 2020 and to fund its $69.1 billion acquisition of 70% of Saudi Basic Industries (SABIC) 2010.SE, for which it will pay instalments through 2028. Earlier this year it raised a $10 billion loan.

“In a world searching for yield there should be no shortage of demand. But persistent low oil prices and the threat that poses to long-term cash generation should be reflected in pricing,” said Hasnain Malik, head of equity strategy at Tellimer.

Ratings agency Fitch revised its outlook last week on Aramco to negative from stable, a day after similar action on the sovereign of Saudi Arabia, which holds a controlling stake in the oil giant.

“This reflects the influence the state exerts on the company through strategic direction, taxation and dividends, as well as regulating the level of production in line with OPEC commitments,” Fitch said.

Aramco’s outstanding U.S. dollar-denominated bonds due in 2029 were trading at 2.05% on Monday, a slightly higher yield than Saudi government paper with a similar maturity, Refinitiv data showed.

Aramco earlier this month reported a 44.6% drop in third-quarter net profit as the pandemic continued to choke demand and weigh on crude prices.

Reporting by Yousef Saba; additional reporting by Davide Barbuscia; Editing by Rashmi Aich and Richard Pullin,

Source