The state-owned oil giant Saudi Aramco plans to sharply increase the amount it invests in energy production, after it reported a doubling of profits in 2021.
The firm aims to boost output significantly over the next five years.
Energy prices have soared in recent months as demand has outstripped supplies of oil and gas.
The war in Ukraine and a reluctance to rely on Russia for energy has added to the pressure to find additional sources of energy.
Saudi Aramco’s move is likely to be welcomed by political leaders worried about the impact of high energy prices, although the boost to investment is aimed at increasing output over the course of the next five to eight years.
Last week prime minister Boris Johnson visited Saudi Arabia to try to persuade the country to release more oil into world markets in the short term.
Saudi Arabia is the largest producer in the oil cartel Opec (Organization of the Petroleum Exporting Countries) and by raising production it could help to reduce energy prices which are currently at 14-year highs.
However, the country has been condemned for a range of human rights abuses: its involvement in the conflict in neighbouring Yemen, the murder in 2018 of journalist Jamal Khashoggi, for jailing dissidents and for widespread use of capital punishment.
The Labour Party accused the government of going “cap in hand” from one dictator to another to tackle the energy crisis.
The chancellor, Rishi Sunak, said the prime minister was “absolutely right” to engage with Saudi Arabia over increasing energy supplies.
“It would be wrong if we weren’t exploring all the avenues we could to bring cheaper energy and more secure energy to people in this country,” Rishi Sunak told the BBC.
The prime minister had “constructive dialogue” about human rights abuses during the visit, he said.
Shadow chancellor, Rachel Reeves, said the UK should be focusing on boosting domestic production of energy through new nuclear and on and off-shore wind generation, to reduce reliance on states like Russia and Saudi Arabia.
“Getting to net zero is the mission of our generation,” she said.
“We’ve got to do more to reduce our reliance on fossil fuels, which is why investment in homegrown electricity is so important.”
Energy markets have been volatile during the pandemic, as sudden changes in economic activity have influenced both supply and demand.
In 2020 Saudi Aramco’s profits dropped sharply as the world economy slowed.
But a reopening in many countries led to a sharp rise in energy prices in 2021. That boosted revenues at all the large energy generating companies.
Saudi Aramco said it planned to increase its capital expenditure to $45-$50bn this year with further increases until the middle of the decade. Last year capital expenditure was $31.9bn.
It would raise its crude oil “maximum sustainable capacity” to 13 million barrels a day by 2027, the company said. It also aims to increase gas production by more than 50% by 2030. Saudi Arabia produced just over 10 million barrels of oil per day in February.
The company more-than doubled its net profit to $110bn in 2021, up from $49bn in 2020. With energy prices remaining high, analysts expect profit to increase further in 2022.
Saudi Aramco said it planned to develop a significant hydrogen export capability and become a global leader in carbon capture and storage technology.