As profits more than double to £23 billion, BP reduces its climate goals.

BP has announced that its annual profits will more than double to $28 billion (£23 billion) in 2022 as a result of a sharp increase in gas prices due to the Ukraine war. This means that the company will have less of an impact on the environment.

The oil and gas giant cut its emissions pledge and plans to increase oil and gas production over the next seven years compared to previous targets, both of which will enrage environmentalists.

As oil companies reap the benefits of higher gas prices while many households and businesses struggle to cope with a sharp rise in energy bills, renewed calls for a tougher windfall tax were prompted by the huge annual profit.

After Shell’s profits more than doubled to $40 billion, the largest profits in the company’s 115-year history, the Labour party requested a revision of Britain’s energy profits levy to take into account more of the exceptional profits made by oil and gas companies.

The TUC’s general secretary, Paul Nowak, stated that struggling families would “rightly feel furious” because they were being treated like “cash machines.”

He added, calling for oil and gas companies to pay more in windfall taxes: “As millions struggle to heat their homes and put food on the table, BP are laughing all the way to the bank.”

Kate Blagojevic, Greenpeace UK’s head of climate justice, said: “BP is yet another fossil fuel giant mining gold out of the vast suffering caused by the climate and energy crisis.

“What’s worse, their green plans seem to have been strongly undermined by pressure from investors and governments to make even more dirty money out of oil and gas. This is precisely why we need governments to intervene to change the rules.”

BP claimed that it had paid $15 billion in global taxes, its highest annual total to date. It claims that the North Sea accounts for less than 10% of global profits. In 2022, it will pay $2.2 billion in taxes, including $700 million from UK windfall taxes known as the energy profits levy. This is lower than the $800 million it anticipated last year due to falling gas prices.

Its chief executive, Bernard Looney, said he “would not be surprised” if its UK tax bill surpassed $3bn in 2023, adding that for every £4 the company made in the North Sea it paid £3 in taxes. “Over the last three years all the profit we’ve made in the North Sea we’ve either paid it all away in tax or reinvested it into Britain,” he said.

A $505 million accounting charge was incurred by BP as a result of the EU’s windfall tax.

Following remarks made by Looney in which he compared the company to a “cash machine” and acknowledged that the levy would not prevent it from making any planned investments, the windfall tax on North Sea oil and gas firms was implemented the previous year.

Looney didn’t say anything about the proposed changes to the windfall tax. He said “Our role is to invest, our role is to pay our taxes … and our role is to return our value to our shareholders who happen to be millions of people, not faceless institutions.”

For the final three months of the year, the oil and gas company reported underlying profits of $4.8 billion, bringing its annual earnings to $27.7 billion, well in excess of the $12.8 billion it earned in 2021. In 2008, BP set a new annual profit record of $26.3 billion.

The company said it would give more money to shareholders, spending $2.75 billion more to buy back its own shares and increasing its quarterly dividend payout by 10%. In 2022, BP returned more than $14 billion to shareholders.

Investors were pleased by BP’s results, which caused the company’s shares to rise by 7% on Tuesday, making it the biggest gainer on the FTSE 100.

By 2030, BP anticipates a 20% to 30% reduction in carbon emissions from oil and gas production, according to Looney’s announcement. It had previously set a goal of reducing emissions by 35-40%.

BP stated that its oil and gas production would be approximately 2 million barrels of oil equivalent per day in 2030, which is 25% less than in 2019, despite the fact that its previous plan had been to cut production by 40%. This was due to the fact that the company was investing more in production and holding onto some assets for a longer period of time.

Responding to BP’s results, the shadow chancellor, Rachel Reeves, asked Jeremy Hunt in the Commons on Tuesday: “Will the government follow our lead and have a proper windfall tax to keep people’s energy bills down?”

The chancellor replied: “Our plans raised more money than [Reeves] was actually advocating in the autumn, but they were also balanced and fair because anything higher will stop investment, increase dependence on [Vladimir] Putin and increase energy prices.”

 

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