AP

Shell profit doubles to record as war drives up energy costs

Feb 2, 2023, 3:07 AM | Updated: 3:05 pm

Signs at a shell petrol station in London, Thursday, Feb. 2, 2023. Global energy giant Shell says a...

Signs at a shell petrol station in London, Thursday, Feb. 2, 2023. Global energy giant Shell says annual profits doubled to a record high last year as oil and gas prices soared after Russia's invasion of Ukraine. London-based Shell Plc on Thursday posted adjusted earnings of $39.9 billion for 2022 and $9.8 billion in the fourth quarter. (AP Photo/Kirsty Wigglesworth)

(AP Photo/Kirsty Wigglesworth)

LONDON (AP) — Global energy giant Shell said Thursday that its annual profits doubled to a record high last year as oil and natural gas prices soared after Russia’s invasion of Ukraine.

London-based Shell Plc posted adjusted earnings of $39.9 billion for 2022 in its financial results for the final three months of the year. Adjusted earnings in the fourth quarter, which exclude one-time items and fluctuations in the value of inventories, rose by 50%, to $9.8 billion, from the same period a year earlier.

Shell is the latest oil company to report bumper profits, which risks reigniting public anger that the fossil fuel industry do more to offset high energy bills for households and small businesses as well as cut climate-changing carbon emissions. U.S.-based Exxon Mobil also posted record annual profits days earlier, while U.K. rival BP and France’s TotalEnergies reported huge quarterly profits last year.

The results demonstrate Shell’s “capacity to deliver vital energy to our customers in a volatile world,” new CEO Wael Sawan said in a statement.

It’s the first earnings report presented by Sawan since he took over as chief executive at the start of the year, replacing Ben van Beurden, who stepped down after nine years. Sawan also has reorganized the company’s core business units.

Sawan, who has worked for Shell for 25 years, was previously director of its integrated gas, renewables and energy solutions business. His appointment was seen as a part of Shell’s strategy to take what it calls a leading role in the energy transition despite criticism that it’s been slow to cut emissions.

Shell also is raising its dividend payout by 15% and buying back $4 billion worth of shares — moves that underline the tension between energy company shareholders seen as reaping big profits and consumers weighed down by higher costs for heating their homes and filling up their cars.

The results were “truly stunning” and “will do nothing to quieten demands for further windfall taxes to redistribute some of the bounty Shell has enjoyed this year thanks to the Ukraine-inspired disruption to global energy markets,” said Russ Mould, investment director at financial services company AJ Bell.

Russia’s war in Ukraine sent global energy prices surging, with natural gas prices in Europe hitting record levels last summer and oil hovering at $120 per barrel. They have since come down, but natural gas prices are still three times what they were before Russia massed troops on the Ukrainian border.

To ease the pain on households and consumers, the European Union and individual countries like Britain and Italy have imposed windfall taxes on energy companies, and U.S. President Joe Biden has raised the idea of a war profit tax.

Shell expected to pay an extra $2.3 billion in taxes to cover the EU and U.K. windfall levies for 2022. The company said it paid out $26 billion to shareholders last year in dividends and share buybacks.

“For the millions of people globally who are struggling with the high cost of energy or the impacts of the climate crisis, Shell reaping in record profits will rightly feel incredibly unfair,” said Alice Harrison of Global Witness, a nonprofit that advocates for environmental sustainability and corporate responsibility.

Global Witness filed a complaint Wednesday with U.S. regulators accusing the company of greenwashing. The group asked the Securities and Exchange Commission to investigate whether Shell broke securities laws and misled investors about the extent of its renewable energy investments.

Global Witness says its analysis shows that 1.5% of Shell’s capital spending went to wind and solar power generation, compared with the 12% that the company claimed in its 2021 annual report.

Greenpeace activists have occupied a vessel in the North Sea transporting a Shell oil production platform to protest the environmental damage by fossil fuel companies. Four activists raised a banner that said “Stop Drilling, Start Paying,” according to photos posted online by Greenpeace this week.

Also Thursday, Norway unveiled plans for extra military and civilian aid for Ukraine financed by oil and gas revenue. The aid package will make Norway, which has fended off accusations it has profited from the war, one of Kyiv’s biggest donors, Prime Minister Jonas Gahr Støre said.

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Shell profit doubles to record as war drives up energy costs