Treasury may lose out over BP and Shell windfall tax
Treasury may lose to BP and Shell windfall tax
The profits of oil giants Shell and BP threaten to fall as a result of a slump in energy prices.
The FTSE 100 companies raised a record amount of cash last year after the war in Ukraine led to spikes in the price of oil and gas.
City analysts expect BP’s profit for the first three months of 2023 to fall by a third to £3.4bn, from £5bn last year.
Stressful: Profits at oil giants Shell and BP threaten to fall as energy prices slump
Shell’s profit is expected to fall slightly to around £7 billion, according to data from Refinitiv.
In the first quarter of last year, the invasion of Ukraine led to a rise in oil and gas prices amid fears that supplies from Russia would be cut off.
At its peak, crude reached more than $120 a barrel in March 2022 and averaged $102 during the first quarter. In the first three months of 2023, it cost an average of $ 81 per barrel.
The figures raise the question of whether the UK government will be able to make an equal amount of money from the two companies through the 35 per cent windfall tax for producers in the North Sea. Shell paid £108 million last year, while BP paid £583 million.
Seventeen percent of BP investors voted last week for a radical proposal to ensure the company’s strategy is in line with the Paris climate agreement, which aims to limit global warming to 1.5 degrees.
This could lead to the group winding down its oil and gas activities. The company already invests billions a year in renewable energy.
Boss Bernard Looney said the group was already “compliant.”