The extraordinary scale of the oil and gas industry’s earnings has drawn renewed criticism and calls for higher taxes.
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Oil major BP reported a record annual profit on Tuesday, more than doubling last year’s total as fossil fuel prices soared after Russia’s full-scale invasion of Ukraine.
The British energy giant posted an underlying replacement cost profit, used as a proxy, for a net profit of $27.7 billion for 2022. This was compared to $12.8 billion in the previous year.
Analysts polled by Refinitiv expected a net profit of $27.6 billion for the full year 2022. BP said its previous annual profit record was $26.3 billion in 2008.
For the fourth quarter, BP posted a net profit of $4.8 billion, beating analysts’ estimates of $4.7 billion.
BP announced a further $2.75 billion share buyback, which it expects to complete in early May before announcing results for the first quarter of 2023. It also raised its dividend by 10% to 6.61 cents per ordinary share.
BP shares are up 0.8% year-to-date.
Speaking to CNBC’s “Squawk Box Europe” on Tuesday, BP CEO Bernard Loney described the earnings as a “good set of results.”
“First of all, I hope you can see a company that is performing well, performing while making changes. The reliability of our operations was the highest in our history, we had the lowest production in 16 years The cost was there, so the business itself is doing great.” They said.
“Second, we are leaning into our strategy today. We are announcing up to $8 billion in energy transition investments this decade and up to $8 billion more in oil and gas to support energy security and energy affordability.” He added. “And third, it’s about making sure we return that to our shareholders.”
The results see BP adding to Big Oil’s profits.
British rival Shell posted its highest ever annual profit of nearly $40 billion on Thursday. Earlier, US oil giant Exxon Mobil reported a profit of $56 billion for 2022, a historic high for the western oil industry. Chevron’s 2022 profits hit a record $36.5 billion.
The West’s biggest fossil fuel companies are expected to make a combined profit of nearly $200 billion for the year, according to Refinitiv data. France’s TotalEnergies is set to report full-year earnings on Wednesday.
The extraordinary scale of earnings has led to renewed criticism of the oil and gas industry and calls for higher taxes.
Senior campaigner Jonathan Noronha-Gant said: “People across the country need look no further than their own front door – one of the UK’s own oil companies – which is making record profits while so many Britons One has to face hardship for no fault of his.” at the advocacy group Global Witness.
“Implementing a windfall tax to help people who are struggling financially, along with significant increases in renewable energy and home insulation, could be the beginning of the end of the fossil fuel era, harmful to both people and the planet. BP is prosperous Because you’re poor,” Noronha-Gant said.
In recent quarters, Big Oil executives have sought to defend their rising profits, saying that the significant disruption to global energy markets caused by the war in Ukraine has reaffirmed the importance of solving the “energy crisis”.
It refers to “safe, affordable and low-carbon energy,” according to a statement to investors from BP CEO Bernard Looney late last year.
BP, which in 2020 set its ambition to become a net zero company “by 2050 or earlier”, recently predicted that oil and gas would form a dramatically smaller part of the global energy mix by the middle of the century.
In its latest annual energy outlook, published on January 30, the company said it sees the share of fossil fuels as a primary energy source falling from 80% in 2019 to between 55% and 20% by 2050. Meanwhile, energy uptake was estimated to have increased from 10% to between 35% and 65% over the same time period.
The wide range of results reflects several possible pathways for the energy transition. But in each of BP’s three scenarios, the pace at which renewable energy enters the global energy system is “faster than any previous fuel in history”, the report said.
— CNBC’s Katherine Clifford contributed to this report.