BP’s bumper earnings stoke new calls for windfall tax

BP posted the highest quarterly earnings in more than a decade amid rising hydrocarbon prices and “extraordinary” trading revenues, prompting renewed calls Higher taxes on oil and gas companies To offset rising energy costs for consumers.

The group’s base profit on replacement cost, the index that analysts most closely follow, rose to $ 6.2 billion in the first three months of the year, the highest since 2008 and more than double the $ 2.63 billion recorded a year earlier.

The bumper figure, which came despite a loss of profits from Russia after a huge drop in value on its business in the country, came against the backdrop of BP’s highest profit in a full year in eight years.

Sir Cair Starmer, leader of the opposition Labor Party in the UK, said BP’s profits had boosted the claim for excessive oil and gas profits from the UK’s North Sea as Ed Miliband, Labor’s shadow climate secretary and net zero secretary, criticized the government for doing so. “Refuses to act.”

BP CEO Bernard Looney told the Financial Times that he understood that many households were “really, really struggling” and that BP’s job was to return cash to shareholders including millions of retirees in the UK, pay its taxes and invest in the UK energy system.

A spokesman for Prime Minister Boris Johnson said that while the tax was not abolished, it could deter companies from investing in the North Sea and put jobs at risk. “Each [energy] The company will have to justify its approach, “the man said.” It’s a matter of getting the right balance. ”

BP has said it intends to invest up to £ 18 billion in the UK energy system by the end of 2030 and is expected to pay up to £ 1 billion in taxes on its North Sea oil and gas profits this year. BP declined to disclose what percentage of the $ 6.2 billion quarterly earnings were generated in the UK.

Lonnie said the redirection of global energy flow following Russia’s invasion of Ukraine led to “probably the most volatile period in the history of energy markets,” adding that volatility underscored the need for integrated energy companies like BP.

“Our first job is to make sure we connect the product supplier to the demand for the products and this quarter there has never been a need for more in the world,” he said.

BP’s quarterly earnings far exceeded average analyst estimates of $ 4.49 billion and rose from $ 4.07 billion in the last three months of 2021. Its shares rose slightly more than 2% in late Tuesday morning trading.

The performance came despite the company’s decision in February to sell 19.75% of its shares in Russian oil maker Rosneft following the invasion of Ukraine, which resulted in a pre-tax charge of $ 24 billion and a paper loss of $ 20.4 billion in the quarter – the highest quarterly loss in BP history.

BP still holds a stake for which there are few potential buyers in light of the decision of most international energy companies to move away from Russia. It declined to comment on how and when it is expected to sell its holding.

The reduction slightly weighed on the oil company’s core earnings – in the last quarter of 2021 Rosneft added $ 745 million to BP’s adjusted earnings – but was more offset by the impact of high commodity prices and the performance of other divisions.

“It’s not just a trading business, it’s all over the company, the business is running well,” Lonnie said, adding that BP’s convenience retail division had its best first quarter.

Lonnie added that the decision to withdraw from Russia did not change BP’s strategy, financial framework or expectations for shareholder distribution.

The company maintained its dividend and expanded its acquisition plan back to $ 2.5 billion in the second quarter of 2022 after completing $ 1.6 billion in repeat purchases in the first three months of the year. Net debt fell for the seventh consecutive quarter to $ 27.5 billion, down from $ 30.6 billion three months earlier after falling from $ 38.9 billion at the end of 2020.

While the state-owned stake in Russia’s share was once at the heart of BP’s long-term strategy, even before the war some investors felt it was becoming increasingly inconsistent with the group’s plans. Lonnie described one of the most comprehensive organizational renovations in the field, and pledged to reduce oil and gas production by 40% by 2030 while increasing spending on renewable electricity by 20 times.

“Former Russia’s BP is a lower risk investment and the rest of the business is performing well,” said Oswald Clint, an analyst at Bernstein. “Across the divisions everything is related to higher volumes, price capture, refining margins and an extraordinary contribution to trade.”

Another report by Jim Picard

BP’s bumper earnings stoke new calls for windfall tax Source link BP’s bumper earnings stoke new calls for windfall tax

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