Oil behemoth BP continues to profit from high energy prices, reporting this morning underlying earnings of £4 billion for the quarter to April. The performance fell from last year’s high, but beat analysts’ forecasts.
Though BP’s second best quarterly return for a decade, today’s result is down nearly a fifth from its record posted in the same quarter in 2022, reflecting recent drops in wholesale energy prices, slowing after last year’s Ukraine-fuelled surge.
BP says it earns only 10% of its profits in the UK. It repeated today that it has paid £ 800 million in UK taxes since chancellor Rishi Sunak last year bowed to pressure & introduced an Energy Profits Levy.
A nominal 75% top rate of tax confronts North Sea operators, made up of standard corporation tax, an additional 10% supplementary, plus the windfall. But generous tax breaks on upgraded and new equipment allow BP and its peers to minimise tax exposure.
The multinational cited strong performance in its gas or oil trading units, plus lower costs of refining, as causes for the near-record profits.
BP chief executive Bernard Looney, pictured, said: “This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations.”
The company will maintain its dividend and buy back a further $1.25 bn in shares, after $2.25 billion bought back in the previous quarter. BP’s share price dropped by 4% in early LSE trading. Shell will report on Thursday.
Last week climate activists demonstrated at BP’s annual meeting, angered at its weakening of commitments to fight climate change.
Labour called for a toughening of the windfall curbs. Shadow energy secretary Ed Miliband said: “The Tory windfall tax is still full of get-out clauses, with billions being bunged at oil and gas companies in special subsidies not available in any other part of the energy sector.”
TUC general secretary Paul Nowak told the Guardian “These eye-watering profits are an insult to working families as millions struggle with sky-high bills.
“The government has left billions on the table by refusing to impose a proper windfall tax on the likes of BP. And even now ministers are refusing to take action to fix our broken energy market and stop this obscene price gouging”.
Amid £2.9bn of worldwide investments in the quarter, BP this month paid developer Harbour Energy for a 40% stake in its Viking CCS project. Repurposing depleted gasfields off the Humberside coast, it aims to meet up to a third of the UK’s annual target of capturing 30 million tonnes of carbon dioxide by 2030.