<article><p class="lead">Saudi state-controlled Aramco's second-quarter profit exceeded that of the three largest-earning oil majors combined, pushed higher by increases in oil prices, sales volumes and refining margins.</p><p>Aramco said today it broke its quarterly profit record <a href="https://direct.argusmedia.com/newsandanalysis/article/2331675">posted in May</a>, with a 90pc year-on-year jump to $48.4bn in the second quarter, more than it made in the first six months of 2021. </p><p>Comparatively, ExxonMobil, Shell and Chevron recorded a collective profit of $47.61bn in the second quarter, according to <i>Argus</i> calculations.</p><p>Aramco's free cash flow rose by 53pc on the year to $34.6bn in the second quarter, with the company citing increases in cash from operating activities. It left its dividend guidance unchanged at $18.8bn, to be paid in the third quarter. Almost all of this goes to the Saudi state.</p><p>"We all know the energy market has been characterised by volatility and instability during the first half of this year," Aramco chief executive Amin Nasser told reporters, attributing the record second-quarter results to higher demand for the company's products. The company forecast oil demand will continue to grow for the remainder of the decade, "despite downward economic pressures on short-term global forecasts." Nasser assessed current global oil demand as "healthy," based on customer nominations "especially from Asia."</p><p>But he flagged supply-side constraints.</p><p>"Ongoing investment in our industry is essential — both to help ensure markets remain well supplied and to facilitate an orderly energy transition," he said, describing "strained" global spare capacity of less than 2mn b/d and "declining fast."</p><p>Saudi and Opec+ officials have faced consumer pressure to increase output this year. The producers' alliance will this month unwind the roughly 9.7mn b/d of cuts it implemented in May 2020 in response to the Covid-19 pandemic, and will add a further 100,000 b/d of output in September. </p><p>"Our commitment is, any time we have been asked [by the Saudi government]… to go to our maximum sustained capacity, which is currently 12mn b/d, we'll be able to bring this on the stream quickly and sustainably," Nasser said.</p><p>Aramco said it produced 13.6mn b/d of oil equivalent (boe/d) in the second quarter, up from 13mn boe/d in the January-March period. It did not break out crude output, which <i>Argus</i> estimates at 10.46mn b/d in the second quarter and 10.14mn b/d in the first.</p><p>Nasser said Aramco is "progressing very well" with plans to raise capacity from 12mn b/d to 13mn b/d by 2027.</p><p>"In 2025, we should go to 12.3mn b/d, in 2026 we should go to 12.7[mn b/d]," he said. He expects a 75,000 b/d increase from the Dammam field, a 300,000 b/d addition from Marjan, 250,000 b/d from Berri and 600,000 b/d from Zuluf. Beyond 2027, Nasser said there should be a 700,000 b/d hike from the Safaniyah field. </p><p>Aramco's gearing ratio narrowed to 7.9pc in June, from 14.2pc at the end of December last year. The company's capital expenditure (capex) was $9.4bn in the second quarter, up by 25pc from a year earlier. It retained guidance of $40bn-50bn for 2022, and continues to expect rises until the middle of the decade.</p><p>"There will be an increase year-on-year to meet our growth… in oil, in gas, in hydrogen, in crude to chemical… until 2025, and then we will hope it will stabilise later," Nasser said. </p><p>He did not confirm plans for a <a href="https://direct.argusmedia.com/newsandanalysis/article/2342078">partial listing of its trading arm</a>, but said there is "some expectation that we will do some of that [floating] with some entities within Aramco."</p><p class="bylines">By Ruxandra Iordache</p></article>
