Shell becomes the latest oil giant to turn a profit with a record £7.7 billion in the first quarter of the year
Shell became the latest oil giant to post huge profits as it raked in a record £7.7 billion in the first quarter of the year.
When faced with new accusations of “profit making,” the industry made money, with strong energy trading offsetting a drop in oil and gas prices.
The haul was a record for the first quarter and £1.4bn better than analysts had expected shares 0.9 percent, or 20p, to 2345.5p.
Five of the world’s largest oil companies – Shell, BP, Equinor, Exxon Mobil and Chevron – have posted quarterly profits of more than £35 billion in recent days.
Black gold: Five of the world’s largest oil companies – Shell, BP, Equinor, Exxon Mobil and Chevron – have posted quarterly profits of more than £35bn in recent days
They have generated huge rewards for investors in the form of share buybacks and dividends.
Shell will pay back £9.6bn to investors in the first half – £3.2bn in dividends and £6.4bn in buybacks – but the company has been accused of a ‘bonanza of profit’ and cashing out to shareholders instead of investing in green energy.
Chief executive, Wael Sawan, praised “strong results and robust operational performance against a backdrop of continued volatility.”
The price of Brent crude oil averaged $81 a barrel in the first quarter, down from $96 in the same period of 2022. It is now just above $70.
Although margins were hit, Shell compensated with improved trading team performance and lower operating costs.
This week, BP also posted a £4bn profit for the first quarter, thanks to lower refining costs and excellent oil and gas trading.
And it plans £3.2bn in buybacks a year, based on current projections.
Winner: Shell boss Wael Sawan (pictured), praised ‘strong results and robust operational performance’
But these gains and buybacks have reignited calls from environmental groups and politicians for a bigger windfall tax on an industry accused of profiting from Russia’s invasion of Ukraine.
Britain’s energy bills have soared over the past 18 months, as millions of people struggle to pay for food, heating and other essentials.
The Unite union called the profits “obscene” and said Shell has joined BP “in continuing the profiteering bonanza”.
Sharon Graham, general secretary of the union, said: ‘The scale of extortion by Shell and BP is one of the corporate scandals of our time. And this is practically unaffected by Rishi Sunak’s so-called windfall tax.’
Last year, the government introduced the energy profit tax to help finance support for families.
Shell paid £108 million in UK taxes, while BP paid £583 million. In January this was increased from a 25 percent to 35 percent tax on the profits of oil and gas producers in the North Sea, bringing the effective rate to 75 percent.
Companies can compensate for the tax by investing in oil and gas extraction in the North Sea, bringing additional supplies.
But Joseph Evans, a researcher at think tank IPPR, said: ‘Shell profits are rising while households are suffering. Instead of using the profits productively, such as investing in the green transition, they have decided to give this excess money directly to their shareholders.
It is time for the government to tax excessive payments to shareholders. A tax on share buybacks could generate billions annually.’
But some have warned there are risks of investment curtailment as the UK seeks to bolster energy security.