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Shell profits soar to $9.1bn amid calls for windfall tax

The Guardian

Shell profits soar to $9.1bn amid calls for windfall tax

Record quarter piles pressure on government to issue one-off levy to curb rising energy bills

Alex Lawson: Thu 5 May 2022 02.55 EDT

Shell has reported a record quarterly profit of $9.1bn (£7.3bn) for the first three months of the year, piling more pressure on the government to implement a windfall tax to fund measures to tackle soaring household energy bills.

The first-quarter profit was boosted by a sharp rise in oil and gas prices, and compared with $6.3bn of profits in the final three months of 2021 and $3.2bn during the first quarter of last year. It was above analysts’ expectations of first-quarter adjusted earnings of $8.7bn.

Campaigners have called for a one-off levy on companies benefiting from soaring oil and gas prices to fund government initiatives to reduce the burden of rising bills.

Shell’s update comes after BP reported its highest quarterly profit in more than a decade on Tuesday. Its profits more than doubled to $6.2bn, and sparked a clamour for a windfall tax.

The government has resisted calls for such a levy. Boris Johnson has said it would discourage oil and gas producers from making investments into domestic energy.

But BP’s chief executive, Bernard Looney, has admitted none of the £18bn UK investments the company is planning would be dropped if a windfall tax were imposed.

Ed Miliband, the shadow energy secretary, said: “Another day, another oil and gas company making billions in profits, and yet another day when the government shamefully refuses to act with a windfall tax to bring down bills.”

Greenpeace UK’s oil and gas campaigner, Philip Evans, said: “By using a big chunk of the bloated profits that Shell, BP and others are raking in to make homes warmer, more energy efficient and kitted out with heat pumps, the government could start to really tackle the climate and cost of living crises simultaneously.”

The company said the increase in its profits was mainly a result of higher energy prices, a strong performance by its trading arm, and lower operating expenses and tax, partly offset by lower volumes.

Shell returned $5.4bn to shareholders in the quarter and plans to spend $4.5bn buying its own shares in the coming months. It announced plans to raise its dividend by about 4% to $0.25 a share for the first quarter of the year.

The chief executive, Ben van Beurden, said: “The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted.

Shell said it had taken a $3.9bn hit after it ditched its Russian investments following the invasion of Ukraine in February.

The UK oil firm is negotiating an exit from the huge Sakhalin-2 liquefied natural gas (LNG) project north of Japan, in which it has a 27.5% stake. It is also divesting Nord Stream 2, a venture with the Russian gas company Gazprom.

Shell said it had stopped all spot purchases of Russian oil and gas and would not renew long-term contracts. However, it said it had “long-term contractual commitments” for Russian LNG, and reducing Europe’s reliance on natural gas supplies from Russia would require “concerted action” between governments, energy suppliers and customers.

The Ukrainian government last month accused Shell of using an “accounting trick” to continue to purchase products containing Russian oil, funding “Putin’s war machine” in the process. Shell has since tightened its restrictions on buying Russian oil.

Shares in Shell rose 3% on Thursday morning.


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