United Kingdom

BP profits rise to £23bn, adding fuel to calls for toughened windfall tax

BP’s annual profits more than doubled to $28bn (£23bn) in 2022 as a sharp increase in gas prices linked to the Ukraine war boosted its earnings, adding fuel to calls for a toughened windfall tax.

The huge profit is likely to anger consumer and green groups, as oil companies reap rewards from higher gas prices while many households struggle to cope with a sharp rise in energy bills.

The Labour party last week asked for Britain’s energy profits levy to be revamped to capture more of the exceptional earnings made by oil and gas firms, after Shell’s profits more than doubled to $40bn, the biggest profits in its 115-year history.

The introduction of a windfall tax on North Sea oil and gas firms last year followed comments by the BP chief executive, Bernard Looney, in which he likened the company to a “cash machine” and admitted the levy would not prevent it making any planned investments.

BP said it had incurred total taxes of $15bn worldwide – its highest annual total. In the North Sea, which it said accounts for less than 10% of global profits, it will pay $2.2bn in tax for 2022, including $700m because of UK windfall taxes, known as the energy profits levy. In November, it said it expected to pay $800m in windfall tax on its North Sea operations.

The oil and gas company reported underling profits of $4.8bn for the final three months of the year, bringing its annual earnings to $27.7bn, well ahead of the underlying profits of $12.8bn posted in 2021.

The fourth-quarter profits represent a slowdown from the $8.2bn recorded in the previous three months, but still outstrip the $4.1bn it made in the equivalent quarter a year earlier. Analysts had expected a profit of about $5bn for the quarter.

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The company announced a 10% increase to its quarterly dividend, and said it would spend a further $2.75bn buying back its own shares.

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