BP scales back climate goals as profits more than double to £23bn

 

BP scales back climate goals as profits more than double to £23bn

 

Energy company faces calls for toughened windfall tax as it reaps rewards from high gas prices

 

Alex Lawson Energy correspondent

Tue 7 Feb 2023 08.31 GMT

https://www.theguardian.com/business/2023/feb/07/bp-profits-windfall-tax-gas-prices-ukraine-war

 

BP has scaled back its climate ambitions as it announced that annual profits more than doubled to $28bn (£23bn) in 2022 after a sharp increase in gas prices linked to the Ukraine war boosted its earnings.

 

In a move that will anger campaigners, the oil and gas giant cut its emissions pledge and plans a greater production of oil and gas over the next seven years compared with previous targets.

 

The huge annual profit led to renewed calls for a toughened windfall tax, as oil companies reap rewards from higher gas prices while many households and businesses struggle to cope with a sharp rise in energy bills.

 

The Labour party last week asked for Britain’s energy profits levy to be revamped to capture more of the exceptional earnings made by oil and gas firms, after Shell’s profits more than doubled to $40bn, the biggest profits in its 115-year history.

 

Responding to BP’s results, Ed Miliband, Labour’s shadow climate change and net zero secretary, said: “It’s yet another day of enormous profits at an energy giant, the windfalls of war, coming directly out of the pockets of the British people.

 

“What is so outrageous is that as fossil fuel companies rake in these enormous sums, Rishi Sunak still refuses to bring in a proper windfall tax that would make them pay their fair share.”

 

Paul Nowak, the general secretary of the TUC, said hard-pressed families were being treated like “cash machines” and would “rightly feel furious”.

 

Calling for higher windfall taxes on oil and gas companies, he added: “As millions struggle to heat their homes and put food on the table, BP are laughing all the way to the bank.

 

“Ministers are letting big oil and gas companies pocket billions in excess profits. But they are refusing to give nurses, teachers and other key workers a decent pay rise. We need a government on the side of working people – not fat cat energy producers.”

 

BP said it had incurred total taxes of $15bn worldwide – its highest annual total. In the North Sea, which it said accounted for less than 10% of global profits, it will pay $2.2bn in tax for 2022, including $700m because of UK windfall taxes, known as the energy profits levy. In November, it said it expected to pay $800m in windfall tax on its North Sea operations. BP took a $505m accounting charge because of the EU’s version of the windfall tax.

 

The introduction last year of a windfall tax on North Sea oil and gas firms followed comments by the BP chief executive, Bernard Looney, in which he likened the company to a “cash machine” and admitted the levy would not prevent it making any planned investments.

 

The oil and gas company reported underlying profits of $4.8bn for the final three months of the year, bringing its annual earnings to $27.7bn, well ahead of the underlying profits of $12.8bn posted in 2021. BP’s previous annual profit record was $26.3bn in 2008.

 

The company announced it would hand more money to shareholders, increasing its quarterly dividend payout by 10% and spending a further $2.75bn buying back its own shares.

 

In total, BP handed back more than $14bn to shareholders in 2022 – $4.4bn in dividends and $10bn in share buybacks.

 

BP’s results pleased investors, pushing up shares 3.6% on Tuesday morning, making it the biggest riser on the FTSE 100.

 

Looney announced that that BP expected the carbon emissions from its oil and gas production would fall by between 20% and 30% by 2030, when compared with 2019. Its previous target had been a 35%-40% drop in emissions.

 

BP said that because it was holding on to some assets for longer and investing more in production, its oil and gas production would be about 2m barrels of oil equivalent a day in 2030 – 25% lower than in 2019, but its previous plan had been to cut production by 40%.