After reporting a doubling of earnings in 2021, Saudi Aramco, the state-owned oil behemoth, expects to significantly boost its investment in energy production.
Over the next five years, the company wants to considerably increase output.
Demand for oil and gas has outstripped supply in recent months, driving up energy costs.
The crisis in Ukraine, as well as a reluctance to rely on Russia for energy, has increased the need to discover other energy sources.
Although the increase in investment is geared at raising output over the next five to eight years, it is likely to be welcomed by political leaders concerned about the impact of rising energy costs.
Boris Johnson, the British prime minister, visited Saudi Arabia this week in an attempt to urge the nation to release more oil into global markets in the short term.
Saudi Arabia is the largest producer in the Opec (Organization of Petroleum Exporting Countries) cartel, and increasing output might assist to lower energy prices, which are at 14-year highs.
However, the government has been criticised for a number of human rights violations, including its role in the Yemeni conflict, the murder of writer Jamal Khashoggi in 2018, the imprisonment of dissidents, and the frequent use of death punishment.
To address the energy problem, the Labour Party accused the government of traveling “cap in hand” from one tyrant to the next.
Rishi Sunak, the chancellor, said the prime minister was “absolutely correct” in approaching Saudi Arabia about expanding energy supply.
“It would be terrible if we didn’t look at all the options available to provide people in this country cheaper and more secure electricity,” Rishi Sunak told reporters.
During his visit, the prime minister engaged in “productive conversation” regarding human rights violations, he added.
Rachel Reeves, the shadow chancellor, said the UK should focus on increasing local energy output through additional nuclear and on- and off-shore wind generating to lessen dependency on countries like Russia and Saudi Arabia.
“Our generation’s aim is to get to net zero,” she stated.
“We need to do more to lessen our dependency on fossil fuels, which is why investing in renewable energy is critical.”
During the epidemic, energy markets were erratic, as rapid shifts in economic activity impacted both supply and demand.
As the global economy slowed in 2020, Saudi Aramco’s revenues plummeted.
However, in many nations, the reopening resulted in a significant increase in energy costs in 2021. All of the major energy firms saw an increase in income as a result of this.
Saudi Aramco said it intended to boost capital spending to $45-$50 billion this year, with more increases anticipated until the middle of the decade. Last year, $31.9 billion was spent on capital projects.
The corporation stated it will increase its crude oil “maximum sustainable capacity” to 13 million barrels per day by 2027. It also plans to boost gas output by more than half by 2030. In February, Saudi Arabia produced little over 10 million barrels of oil per day.
From $49 billion in 2020 to $110 billion in 2021, the oil corporation more than quadrupled its net profit.
The price of a barrel of Brent crude oil surged by nearly 50% in 2021, and experts predict earnings to rise much more in 2022 if energy prices continue high.
Saudi Aramco announced plans to build a large hydrogen export capacity and become a world leader in carbon capture and storage technology.