Energy giants Shell and Centrica enjoy soaring
profits as prices rise
British Gas owner Centrica enjoyed half-year profits
five times higher than those in 2021's first six months, while Shell attributed
its enormous numbers to higher prices, refining profits, and gas trading.
Thursday 28
July 2022 09:45, UK
Shell says it aims to be a net-zero emissions energy
business by 2050
Shell has reported record profits of $11.5bn (£9.4bn)
for the second quarter, more than double last year's figure of $5.5bn (£4.5bn).
The oil
giant had already smashed its own quarterly record at the start of the year
when it clocked up profits of $9.1bn (£7.2bn), but the sums continued to rise
into Q2.
Shell
attributed the enormous numbers to higher prices, refining profits and gas
trading, though this was partly offset by lower liquefied natural gas trading.
Its
shareholder returns will remain "in excess of 30% of cash flow from
operating activities," it said.
The record
cash flowing into energy companies like Shell has reignited calls for a tougher
windfall tax on additional profits on oil and gas, the prices of which have
soared as Russia invaded Ukraine and threatened to cut off gas supplies to
Europe.
Meanwhile,
British Gas owner Centrica enjoyed £1.3bn operating profits in the first six
months of 2022, five times the amount from the same period last year of £262m.
Britain's
largest energy supplier was able to restore its dividend as profits soared,
boosted by asset sales and rocketing energy prices.
However,
the firm took a hit to British Gas, whose first-half profit fell 43% from £172m
in 2021 to £98m this year.
A UK price
cap on the most widely used domestic energy contracts is set to rise to £3,850
in January, almost triple the amount from October last year (£1,277 a year),
contributing to rising inflation and a cost of living squeeze.
Friends of
the Earth energy campaigner Sana Yusuf said the bulk of Shell's profits
"should be used to insulate our homes and help cash-strapped households
pay for their heating this winter, rather than developing more fossil fuel
projects that roast the planet."
In May, the
then chancellor Rishi Sunak announced a new 25% levy on the extraordinary
profits the oil and gas sector was making, on top of the existing 40% tax rate,
in order to fund help with the cost of living crisis.
But
companies could avoid most of the additional tax bill after the former
chancellor doubled the relief they can get for investing in new oil and gas
extraction from 46p for every £1 invested in the UK to 91p.
CEO Ben van
Beurden today told CNBC the oil price for the first half of this year was
comparable to that in 2013. But since then, Shell has "significantly
improved our portfolio," divesting more than $80 billion worth of assets
showing discipline with its CapEx.
"So a
lot of hard work to make the company a better company. So yes, of course, when
then oil prices come back to where they were in 2013, you see stronger results.
That's not a windfall. That's the result of a lot of hard work," Mr van
Beurden said.
The oil
major has acknowledged the worry about high energy costs and support needed to
help ends meet.
But says it
needs to sustain investment to secure supplies oil and gas the UK needs today,
while allocating spend for future low carbon energies.
Mr van
Beurden said Shell was currently spending a third of its combined $55bn OpEx on
CapEx on the energy transition, which they were aiming to increase to half by
2025. "So we are definitely stepping up the investments there," he
said
Its energy
transition strategy, released last year, sets out a target to wind down its oil
and gas production, including divestment, by 1-2% a year through to 2030.
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