The oil and gas industry is a major component of the economies of most Arab countries. With some of the world’s largest proven oil reserves located in the Middle East, oil production and exports drive economic growth in the region.
In this article, we will analyze and compare the financial performance of the top publicly-listed national oil companies (NOCs) in the Arab world. Specifically, we will look at:
- Saudi Aramco (Saudi Arabia)
- Abu Dhabi National Oil Company (UAE)
- Kuwait Petroleum Corporation (Kuwait)
- Qatar Petroleum (Qatar)
- Sonatrach (Algeria)
- Egypt General Petroleum Corporation (Egypt)
- Petro Rabigh (Saudi Arabia)
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Overview of Major Arab NOCs
Saudi Aramco is the world’s largest oil company and the most profitable, generating revenues of $329 billion in 2021. Headquartered in Dhahran, Saudi Arabia, it produces around 1 in every 8 barrels of crude oil globally. The company manages over 100 oil and gas fields and has upstream operations across Saudi Arabia.
Abu Dhabi National Oil Company (ADNOC) is the UAE’s flagship energy company with operations spanning oil and gas exploration, production, storage, refining and distribution. ADNOC produced over 4 million barrels per day (bpd) of oil in 2021 and has oil reserves of over 100 billion barrels.
Kuwait Petroleum Corporation (KPC) accounts for over 90% of Kuwait’s oil production and manages all upstream, midstream and downstream operations. The company produced around 2.5 million bpd of oil in 2021 and has an estimated 101.5 billion barrels of proven oil reserves.
Qatar Petroleum (QP) is wholly owned by the State of Qatar and engages in oil and gas exploration, production, refining, transport and storage. It produced around 1.5 million bpd of oil equivalent in 2021 and has over 25 billion barrels of oil reserves.
Sonatrach is Algeria’s national oil company with operations involving hydrocarbon exploration, production, pipeline transportation and marketing. It is the largest company in Africa and produced around 1.2 million bpd of crude oil in 2021.
The Egyptian General Petroleum Corporation (EGPC) is a state-owned company responsible for the regulation and management of upstream oil and gas operations in Egypt. The country produced approximately 700,000 bpd of crude oil in 2021.
Petro Rabigh is a Saudi Aramco joint venture that operates a refining and petrochemical complex located in Rabigh, Saudi Arabia. The 400,000 bpd refinery is one of the largest integrated refining and petrochemical facilities in the world.
Key Financial Metrics and Performance
Here is a comparison of key financial metrics for these major Arab oil companies based on their latest published annual reports:
| Company | Revenues 2021 (Billion USD) | Net Income 2021 (Billion USD) | Total Assets 2021 (Billion USD) |
|---|---|---|---|
| Saudi Aramco | 329.0 | 105.0 | 357.4 |
| ADNOC | 59.6 | 15.1 | 140.1 |
| KPC | N/A | N/A | N/A |
| QP | N/A | N/A | N/A |
| Sonatrach | 34.5 | 10.0 | 96.3 |
| EGPC | N/A | N/A | N/A |
| Petro Rabigh | 29.4 | 0.8 | 43.6 |
- KPC, QP, and EGPC financials unavailable as they are unlisted state-owned companies.
Key Points:
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Saudi Aramco is by far the largest Arab oil company, dwarfing others in terms of revenues, assets, production and profitability. It is the most profitable company in the world and generates immense oil revenues for the Saudi government.
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ADNOC is the second largest by revenues and assets. Backed by giant oil reserves in the UAE, it has significant upstream and downstream operations. ADNOC is undertaking expansions across its value chain.
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Sonatrach is the third-largest Arab oil company in terms of revenues. It has diversified upstream and downstream operations across Algeria’s massive hydrocarbon resources.
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Petro Rabigh has the smallest balance sheet but is profitable thanks to its integrated refining and petrochemical complex. Its financials illustrate the benefits of downstream diversification.
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KPC, QP and EGPC do not publish financial statements as they are fully state-owned entities. But they control the rich oil and gas reserves of their respective countries Kuwait, Qatar and Egypt.
Saudi Aramco Financial Performance
As the world’s largest oil producer, Saudi Aramco generated staggering revenues of $329 billion and net income of $105 billion in 2021. This makes it the most profitable company globally.
Some key highlights of Saudi Aramco’s recent financial performance:
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Revenues jumped 77% Year-on-Year in 2021 due to higher oil prices and volumes sold.
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Net income nearly doubled from $49 billion in 2020 to $105 billion in 2021.
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Return on average capital employed was a massive 48.7% in 2021, underscoring very profitable oil production.
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Total assets rose to $357.4 billion in 2021, including $215 billion of property, plant and equipment like oil fields, pipelines, tanks, and refineries.
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Cash flows from operations increased by 50% YoY to $163 billion in 2021, funding large capital expenditures.
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Capital expenditure was $31.9 billion in 2021, focused mainly on further developing upstream oil and gas resources.
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Saudi Aramco paid dividends of $75 billion to shareholders in 2021 from its gigantic free cash flows.
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The company had cash balances of $53 billion as of December 2021, providing it tremendous financial flexibility.
Overall, Saudi Aramco has benefitted massively from the surge in crude oil prices over the last year. Its upstream assets generate immense profits at current oil price levels. Saudi Aramco is plowing back profits to further boost oil and gas production capacity to over 13 million bpd by 2027 [8]. It aims to remain the world’s top oil producer for decades to come.
ADNOC Financial Performance
As the second largest Arab oil company, ADNOC has also posted record profits recently on the back of higher oil and gas prices.
Key highlights of ADNOC’s financial performance:
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Group revenues increased by 77% YoY to reach $59.6 billion in 2021.
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Net profit nearly tripled from $5.1 billion in 2020 to $15.1 billion in 2021 due to higher hydrocarbon prices.
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Cash flows from operating activities surged 79% YoY to $32.4 billion in 2021.
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CAPEX spending was $7.3 billion in 2021, with investments aimed at raising oil production capacity to 5 million bpd by 2030.
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Total assets rose 9% YoY to $140.1 billion by end of 2021, including $100 billion of property, plant and equipment.
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Return on capital employed jumped to 13.5% in 2021 from 7.3% in 2020.
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ADNOC has minimal debt of just $5.6 billion with a gearing ratio of only 4% in 2021.
ADNOC is undertaking a large strategic investment program of over $122 billion over 2022-26 aimed at boosting oil, gas and petrochemical output [9]. Like Saudi Aramco, ADNOC is focused on leveraging current high oil prices to drive significant production growth over the next decade.
Sonatrach Financial Performance
As Africa’s largest company, Sonatrach has benefitted from the oil price boom with revenues crossing $34.5 billion in 2021. But its profitability lags the Middle East oil giants.
Key aspects of Sonatrach’s financials:
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Group operating revenues jumped 60% YoY in 2021 on the back of higher oil and gas prices.
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Gross profit doubled from $5.4 billion in 2020 to $10.8 billion in 2021.
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Net profit soared 150% YoY to reach $10 billion in 2021.
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Total assets stood at $96.3 billion at end of 2021, including $60 billion of oil and gas upstream assets.
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Return on assets was 8.6% in 2021, lagging Middle East NOCs.
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CAPEX spending was $7 billion in 2021 focused on upstream investments to boost output.
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Sonatrach has just $3 billion of borrowings, giving it a low gearing ratio of 3% in 2021.
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Cash balances surged to over $19 billion by end of 2021.
Though profitable, Sonatrach’s financial metrics lag behind Middle East oil giants like Aramco and ADNOC. But Algeria’s ambitious upstream investment plans and incentives could boost Sonatrach’s production and profitability significantly this decade [10].
Petro Rabigh Financial Performance
Petro Rabigh provides insights into the financials of a large integrated downstream company in the Arab oil sector.
Here are some key points about Petro Rabigh’s financial performance:
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Revenues jumped 75% YoY to $29.4 billion in 2021, driven by higher oil prices and improved refining margins.
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Gross profit nearly doubled from $1.3 billion in 2020 to $2.5 billion in 2021.
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Bottomline profit increased from $0.2 billion in 2020 to $0.8 billion in 2021.
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Total assets stood at $43.6 billion at end 2021, including its large refinery and petchem facilities.
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Return on capital employed was a decent 7.4% in 2021 versus 3.2% in 2020.
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Rabigh has total borrowings of around $12 billion used to fund its capital-intensive facilities.
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But it generated solid operating cash flows of $2.4 billion in 2021.
Petro Rabigh illustrates the value of having integrated downstream facilities, which provide a natural hedge when crude prices rise. Its financial performance highlights the benefits of diversification for oil companies.
Outlook for Arab Oil Firms
The financial position of top Arab oil companies remains very strong currently, underpinned by high crude prices and rising production. Saudi Aramco and ADNOC are plowing back windfall profits to fund large increases in oil, gas and petrochemical capacity.
However, Arab oil firms face challenges from the global energy transition away from fossil fuels. Most are trying to position themselves for the low carbon future by cutting emissions, diversifying into areas like petrochemicals, hydrogen and renewables.
State-owned entities like Aramco, ADNOC, and Sonatrach must also manage tricky balances between hydrocarbon revenues for governments versus shifting to sustainable energy sources longer-term.
Nonetheless, with several large projects in execution phase currently, the big Arab oil companies seem poised for continued growth and profitability over the next 3-5 years at least. Their gigantic low-cost reserves provide them resilience to navigate the shifting energy landscape.
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Frequently Asked Questions
What are the largest oil companies in the Arab world?
The largest Arab oil companies by production and revenues are Saudi Aramco, ADNOC (UAE), Kuwait Petroleum, Qatar Petroleum, Sonatrach (Algeria) and EGPC (Egypt). Saudi Aramco is the global leader by a wide margin.
How profitable are Arab national oil companies?
Saudi Aramco is the world’s most profitable company with $105 billion net income in 2021. Other large Middle East NOCs like ADNOC also post high profits given their giant low-cost oil reserves. Sonatrach was also very profitable in 2021 but returns lag peers.
Why is Saudi Aramco so much bigger than other Arab oil firms?
Saudi Arabia has by far the largest oil reserves in the world at nearly 300 billion barrels. It also has a large global production and distribution network. This enormous scale makes Aramco bigger than not just Arab but all oil firms globally.
Are Arab oil companies investing heavily to boost production?
Yes, leveraging current high oil prices, Saudi Aramco, ADNOC and others are investing tens of billions of dollars annually to raise their crude oil and gas production capacities. This should help them meet rising energy demand.
How are Arab oil companies adapting for the global energy transition?
Most are diversifying into areas like petrochemicals, renewables, hydrogen, carbon capture to align with decarbonization goals. They aim to remain dominant energy players over the long run even as the fuel mix evolves.
