Shell has recorded its highest-ever profit in the energy giant’s entire 115-year history, as it benefited hugely from soaring energy prices.
Shell said that its core profits skyrocketed to £68.1bn ($84.3bn) in 2022, surpassing the expectations of industry experts.
This gargantuan profit haul will increase the pressure on prime minister Rishi Sunak and chancellor Jeremy Hunt to tax energy producers further, with UK households coming under increasing and relentless pressure from their astronomical bills.
Bumper profits by producers in 2022 eventually persuaded the government to launch a windfall tax, called the ‘Energy Profits Levy’, which was subsequently further strengthened by Hunt.
Shell said that it paid £1.5bn ($1.9bn) in windfall tax charges to the UK and EU.
Labour has accused Sunak of being “too weak” to stand up to oil and gas interests following the news of Shell’s profit increase.
Shadow climate change secretary Ed Miliband said: “As the British people face an energy price hike of 40 per cent in April, the government is letting the fossil fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax.
“Labour would stop the energy price cap going up in April, because it is only right that the companies making unexpected windfall profits from the proceeds of war pay their fair share.
“When it comes to oil and gas interests, Rishi Sunak is too weak to stand up for the British people.”
Lib Dem leader Sir Ed Davey, a former energy secretary, said: “No company should be making these kind of outrageous profits out of Putin’s illegal invasion of Ukraine. Rishi Sunak was warned as chancellor and now as prime minister that we need a proper windfall tax on companies like Shell and he has failed to take action.
“Families across the country are struggling to heat their homes and feed their families and this government turns round and says ‘There is nothing we can do’.
“They must tax the oil and gas companies properly and at the very least ensure that energy bills don’t rise yet again in April.”
From April this year, the energy bill for an average household will be capped at £3,000, up from the current £2,500.
Shell has also announced that it will pay a further £3.2bn ($4bn) to shareholders through a new share buyback programme and will increase dividend payments by 15 per cent.
The London-listed oil major told investors that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) leapt 53 per cent against the previous year, after energy prices were catapulted higher following the Russian invasion of Ukraine.
Shell added that core profits hit £16.6bn ($20.6bn) in the fourth quarter of 2022, although this in fact represented a 4 per cent decrease compared to the same period in 2021.
Sawan said: “Our results in Q4 and across the full year demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world. We believe that Shell is well positioned to be the trusted partner through the energy transition.
“As we continue to put our powering progress strategy into action, we will build on our core strengths, further simplify the organisation and focus on performance.
“We intend to remain disciplined while delivering compelling shareholder returns, as demonstrated by the 15 per cent dividend increase and the $4bn share-buyback programme announced today.”
Campaigners from Greenpeace targeted Shell’s headquarters in London as the profit was announced, describing the fossil-fuel giant as “profiteering from climate destruction” after its record profit haul.
Elena Polisano, senior climate justice campaigner at Greenpeace, said: “While Shell counts their record-breaking billions, people across the globe count the damage from the record-breaking droughts, heatwaves and floods this oil giant is fuelling. This is the stark reality of climate injustice, and we must end it.”
Friends of the Earth’s Sana Yusuf said: “People can see the injustice of paying eye-watering energy costs while big oil and gas firms rake in billions.
“Fairly taxing their excess profits could help to fund a nationwide programme of insulation and a renewable energy drive, which would lower bills, keep homes warmer and reduce harmful carbon emissions.”
Oil and gas firms are subject to the Energy Profits Levy, a windfall tax which increased from 25 per cent to 35 per cent in January. Its critics have said that it should go much further, much sooner.
Paul Nowak, general secretary, TUC, said: “The time for excuses is over. The government must impose a larger windfall tax on energy companies. Billions are being left on the table.
“Instead of holding down the pay of paramedics, teachers, firefighters and millions of other hard-pressed public servants, ministers should be making big oil and gas pay their fair share.”
Unite general secretary Sharon Graham said: “People will be totally aghast at the scale of Shell’s astronomical profits. Millions cannot afford to heat their homes and businesses can’t pay their fuel bills.
“Meanwhile, Shell shareholders are laughing all the way to the bank. Shell’s £5bn of dividends would go a long way towards paying for a 10 per cent wage hike for NHS workers.
“Is the government going to get real about taking on profiteering or, as usual, continue its false propaganda that it’s workers’ wage rises that are causing inflation?”
Source: E&T
