BP announces record annual profits of £23bn

BP announces record annual profits of £23bn
BP announces record annual profits of £23bn

Arabnews24.ca:Tuesday 7 February 2023 02:29 AM: BP has revealed record annual profits, just days after rival Shell also reported a bumper profit.

The London-based firm said its main measure, underlying replacement cost profit, came in at $27.7bn (£23bn) for 2022 - more than double the previous year's sum despite weaker oil and gas costs knocking its performance in the final quarter.

The figures will further inflame the debate on whether big oil and gas firms should be handing more back through windfall taxes amid the energy-driven cost of living crisis.

It comes just days after Shell's reported profits of £32.2bn.

Both firms suffered big losses during 2020 as the COVID pandemic hammered energy costs due to a lack of demand.

But the recovery in oil and gas prices since - latterly guided by Russia's war in Ukraine - has prompted national governments including the UK to impose windfall taxes on the sector.

Domestic critics, including Labour, want stiffer clawbacks.

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'These are the windfalls of war'

They argue energy firms' earnings have been gained at the expense of wider society because wholesale prices have caused decades-high inflation and left households and businesses nursing record bills on many fronts.

Chancellor Jeremy Hunt's autumn statement last November had raised the energy profits levy on UK extraction activities to 35% from 25%, as the government sought to recover more on the back of its continuing energy bill support.

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It left the effective tax rate at 75% because of the 40% corporation tax charge already applied though some investment relief is granted under the levy.

Despite that hit, energy company dividends have continued to rise on the wider, more substantial earnings.

That is welcome news for pension values as the vast majority of funds are obliged to hold top tier stocks.

Shareholders have been further rewarded through share buy-backs.

Shell said last week that it expected to pay around £100m under the levy's rules for its UK offshore activities last year - taking its global windfall tax bill to almost £2bn.

Its total global tax contribution was £10.8bn.

BP had earlier forecast a 2022 UK windfall tax sum of around £678m but its results statement suggested the figure had risen to £1.8bn.

The UK's largest producer of oil and gas in the North Sea, Harbour Energy, blamed the impact of the levy for a decision last month to cut jobs.

It is expected to reveal the figure payable to the Treasury next month having warned investors in January that the sum would be materially higher than expected at the time of its half year results.

Harbour has said that the increase to the levy had forced it to review its North Sea activities at a time when the country badly needed domestic supplies to bolster energy security.

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