LONDON (Parliament Politics Magazine) – Shell has declared a record quarterly profit of $9.1 billion (£7.3 billion) for the first quarter of the year, increasing pressure on the government to enact a windfall tax to fund steps to combat rising home energy bills.
A strong surge in oil and gas prices bolstered the profits of the first three months, which compares to $6.3 billion in the final quarter of 2021 and $3.2 billion in the first quarter of last year. It beat analysts’ projections of $8.7 billion in first-quarter adjusted earnings.
Campaigners have proposed a one-time fee on firms that profit from high oil and gas prices to fund government measures aimed at lowering the burden of soaring bills.
Shell’s announcement follows BP’s announcement on Tuesday of its greatest quarterly profit in over a decade. Profits more than doubled to $6.2 billion, prompting calls for a windfall tax.
The government has been defiant in its opposition to such a tax. Boris Johnson has stated that it would deter oil and gas companies from investing in domestic energy.
However, BP’s CEO, Bernard Looney, has stated that if a windfall tax were introduced, none of the company’s planned £18 billion in UK investments would be cancelled.
“Another day, another oil and gas corporation reaping billions in profits, and still another day when the government shamefully refuses to act with a windfall tax to bring down bills,” said Ed Miliband, the shadow energy minister.
By using a big percentage of the inflated profits that BP, Shell and others are raking in to make homes more energy efficient, warmer and kitted out with heat pumps, the government could begin to really handle the cost of living and climate crises simultaneously, Greenpeace UK’s oil and gas campaigner, Philip Evans, said.
Higher energy prices, a great performance by its trading arm, and lower operational expenditures and tax, the business claimed, were primarily responsible for the increase in profits, which was partially offset by lower volumes.
Shell returned $5.4 billion to shareholders in the quarter and aims to spend $4.5 billion in the following months to buy back its own shares. It announced plans to increase its dividend by around 4% to $0.25 per share for the first three months of the year.
The Ukraine war was first and foremost a human tragedy, said Ben van Beurden, but it had also caused considerable disruption to global energy markets, demonstrating that secure, reliable, and inexpensive energy couldn’t be taken for granted.
The effects of that uncertainty, as well as the higher costs that come with it, were being felt throughout the country. They had been working with governments, customers, and suppliers to sort out the challenging issues and offer support and solutions where they could, he added.
Following the invasion of Ukraine in February, Shell announced it had suffered a $3.9 billion loss as a result of abandoning its Russian projects.
The UK oil company is discussing a sale of its 27.5 percent stake in the massive Sakhalin-2 liquefied natural gas (LNG) project north of Japan. It is also divesting Nord Stream 2, a joint venture with Gazprom of Russia.
Shell said it had ceased buying Russian gas and oil on the spot market and would not renew long-term contracts. It did say, though, that it had “long-term contractual commitments” for Russian LNG and that lowering Europe’s dependency on Russian natural gas would necessitate coordinated effort from governments, energy suppliers, and customers.
Shell was accused by the Ukrainian government last month of employing an “accounting trick” to continue purchasing items containing Russian oil, thus backing “Putin’s war machine.” The restrictions on buying Russian oil have been tightened by Shell since then.
