Fitch Ratings has raised <a href="https://www.thenationalnews.com/business/energy/2023/03/13/saudi-aramco-profit-oil/" target="_blank">Saudi Aramco’s</a> long-term foreign and local currency issuer default ratings because of the company’s strong business profile and its ambitions to deliver a “sustainable and progressive dividend”. The <a href="https://www.thenationalnews.com/business/economy/2023/04/05/fitch-upgrades-saudi-arabias-rating-on-economic-reforms-and-formidable-finances/" target="_blank">ratings agency </a>upgraded the world’s largest oil supplier’s rating to A+ from A with a stable outlook, it said on Friday. “We assess status, ownership and control, and support track record as strong as Saudi Aramco is majority-owned by the <a href="https://www.thenationalnews.com/business/economy/2023/03/09/saudi-arabias-economy-surges-55-in-q4-on-higher-non-oil-and-oil-activities/" target="_blank">government</a>. “We view the socio-political or financial implications of the company's default as 'very strong' due to Saudi Aramco's key role in the Saudi Arabian economy as a key purveyor of feedstock to the country's power generation fleet and other key end-markets,” Fitch said. It also factored in Aramco's contributions to government revenues and its status as a “prominent issuer on the international capital markets, effectively serving as a proxy for the sovereign”. The rating action follows Fitch’s decision this month to raise Saudi Arabia's <a href="https://www.thenationalnews.com/business/economy/2023/04/05/fitch-upgrades-saudi-arabias-rating-on-economic-reforms-and-formidable-finances/" target="_blank">long-term foreign-currency default rating</a> to A+ from A with a stable outlook. Saudi Aramco's capital expenditure rose 18 per cent annually to more than $37.6 billion last year due to continuing crude oil increments and other development projects. The company expects its 2023 capex to be between $45 billion and $55 billion, with the amount increasing until about the middle of the decade. “The increase is largely driven by Aramco's efforts to increase maximum sustainable capacity of oil by one million barrels per day to 13 million bpd by 2027 as mandated by the government, as well as other strategic initiatives, including gas production, liquids to chemicals production, and green projects,” Fitch said. <a href="https://www.thenationalnews.com/queryly-advanced-search/?query=Aramco">Saudi Aramco’s </a>annual net profit surged 46 per cent in 2022, driven by higher <a href="https://www.thenationalnews.com/business/energy/2022/12/31/oil-prices-end-2022-higher-despite-demand-concerns/">oil prices</a>. Net profit for the 12 months to the end of December, increased to a record $161.1 billion, from $110 billion in 2021, the company said in a regulatory filing last month. Saudi Aramco’s financial profile also benefitted from strong pre-dividend free cash flow generation, conservative financial policies and a net cash position, Fitch said. “Its business profile is characterised by large scale production, vast reserves, low output costs and expansion into downstream and petrochemicals. “Although the company is more exposed to energy transition risk than oil majors, particularly in Europe, Saudi Aramco is investing in natural gas production [expected to grow by more than 50 per cent by 2030], renewables [12 gigawatts of net renewables capacity planned by 2030], blue ammonia and liquids-to-chemicals facilities,” Fitch said. In 2021, Aramco announced plans to target net-zero carbon emissions by 2050 after the kingdom said it aimed to neutralise its emissions by 2060. As part of the oil company's investment to expand capacity to 13 million bpd, Aramco is adding to its gas-processing capacity and eliminating liquid-burning in the kingdom. Last month, <a href="https://www.thenationalnews.com/business/economy/2023/03/23/moodys-affirms-ratings-of-six-saudi-corporates-and-revises-their-outlook-to-positive/" target="_blank">Moody's Investors Service</a> also affirmed Saudi Aramco’s A1 rating and revised its outlook to positive from stable. Aramco's free cash flow was $148.5<b> </b>billion last year, compared with $107.5 billion in 2021. Aramco declared a dividend of $19.5 billion for the fourth quarter of 2022, to be paid in the current quarter. This represents a 4 per cent increase compared with the previous quarter. “We estimate … Saudi Aramco's capex and dividend payments should be broadly covered by operating cash flows. We assume that Saudi Aramco has the flexibility to reconsider its dividend commitment in case oil prices fall or capex is higher than we currently assume,” Fitch said.