Shell has reported record profits of $11.5 bilion (£9.4 billion) for the second quarter, more than double last year’s figure of $5.5 billion (£4.5 billion).
The oil giant had already smashed its own quarterly record at the start of the year when it clocked up profits of $9.1 billion (£7.2 billion), but the sums continued to rise into Q2 2022.
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 per cent of cash flow from operating activities,” Shell 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.
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Meanwhile, British Gas owner Centrica enjoyed £1.3 billion operating profits in the first six months of 2022, five tiimes the amount from the same period last year of £262 million.
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 £172 million 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 2022, 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 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 said 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 the 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.”
Ben van Beurden
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.
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