Shell has prompted anger after annual profits more than doubled to a record of nearly $40bn, boosted by a surge in wholesale gas prices linked to the war in Ukraine and as households struggle to pay huge energy bills.
The oil and gas company posted profits of $9.81bn in the final quarter of last year, compared with $6.4bn a year earlier. That took annual adjusted profits to $39.87bn (£32.2bn) in 2022, far outstripping the $19.3bn notched up in 2021.
Paul Nowak, general secretary of the TUC, said the profits were “obscene” and “an insult to working families”.
The step up in Shell and its competitors’ profits during 2022 prompted the government to introduce a windfall tax on North Sea operators, which was later toughened by the chancellor, Jeremy Hunt.
Shell was criticised in October when it said it had paid no UK windfall tax up to that point. Last month, the company said it expected to take a hit of about $2bn to its earnings for the final quarter of 2022 as a result of windfall taxes in the UK and EU.
Shell on Thursday confirmed it had taken a $1.9bn charge related to windfall taxes in the EU and UK but did not break down how much it had paid for each one.
Nowak said windfall taxes should be increased. “As households up and down Britain struggle to pay their bills and make ends meet, Shell are enjoying a cash bonanza. The time for excuses is over. The government must impose a larger windfall tax on energy companies. Billions are being left on the table,” he said.
“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.”
Analysts had expected Shell’s chief executive, Wael Sawan, to report adjusted earnings of $7.97bn for the fourth quarter and $38.17bn for the year, in his City debut. It represented an increase on the $9.45bn registered in the third quarter, aided by a bounceback in earnings from its liquefied natural gas trading arm.
The company said total shareholder distributions in the quarter were $6.3bn after hiking the dividend by 15%. It also announced $4bn of share buybacks over the next three months. In total, Shell distributed $26bn to shareholders in 2022.
The company has benefited from the squeeze on international gas supplies, which began in 2021 and was exacerbated by Russia’s full invasion of Ukraine last year.
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.”
Howeber, the Liberal Democrat leader, Ed Davey, 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.”
Shell has also been accused of overstating how much it is spending on renewable energy, and faced calls this week to be investigated and potentially fined by the US financial regulator.
Shell invested $24.83bn during 2022, up from $19.69bn in 2021. The firm spent $12.3bn on oil and gas projects, compared with $3.46bn on its renewable energy division. It expects to spend $23bn to $27bn over the next year.
Greenpeace UK senior climate justice campaigner Elena Polisano said: “World leaders have just set up a new fund to pay for the loss and damage caused by the climate crisis. Now they should force historical mega-polluters like Shell to pay into it.
“It’s time to make polluters pay. If they had pivoted their business and transitioned away from fossil fuels sooner, we wouldn’t be in such a deep crisis. It’s time for them to stop drilling and start paying.”
Jonathan Noronha-Gant, senior campaigner at Global Witness, said: “People have every right to be outraged at the enormous profits that Shell has made in the midst of an energy affordability crisis that has pushed millions of families into poverty … Shell’s profits are an insult. Shell is richer because we’re poorer.”
The company, which is worth $165bn, last week embarked on a review of its division supplying energy and broadband to homes in Europe, putting 2,000 UK jobs at risk.
