Sopa Images | Lightrocket | Getty Images Oil and gas giant BP on Tuesday reported stronger-than-expected third-quarter earnings, supported by strong commodity prices and strong natural gas trading and trading. The British energy major posted underlying replacement cost profit, used as a proxy for net profit, of $8.2 billion for the three months to the end of September. That compared to $8.5 billion in the previous quarter and marked a significant increase from a year earlier, when net income was $3.3 billion. Analysts polled by Refinitiv had expected net income of $6 billion for the third quarter. BP announced another $2.5 billion in share buybacks and said net debt fell to $22 billion from $22.8 billion in the second quarter. It reported a net loss for the quarter of $2.2 billion, compared with a profit of $9.3 billion in the previous quarter. BP said this third-quarter result included net-of-tax inventory losses of $2.2 billion and a charge to adjust non-tax items of $8.1 billion. The world’s biggest oil and gas majors reported higher profits in recent months, benefiting from a rise in commodity prices following Russia’s invasion of Ukraine. Along with BP, oil majors Shell, TotalEnergies, Exxon and Chevron posted third-quarter profits of nearly $50 billion. That has renewed calls for higher taxes on record oil company profits, particularly at a time when rising gas and fuel prices have fueled inflation around the world.
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US President Joe Biden on Monday called on oil majors to end “war profiteering” and threatened to seek higher taxes if the industry giants do not work to lower gas prices. Oil and gas industry groups have previously condemned calls for a windfall tax, warning it would fail to address a sharp rise in energy prices and could ultimately deter investment. “This quarter’s results reflect that we continue to deliver while transforming,” BP chief executive Bernard Looney said. “We remain committed to helping solve the energy trilemma – secure, affordable and lower-carbon energy. We’re providing the oil and gas the world needs today – while at the same time – investing to accelerate the energy transition,” said Looney. Shares in London-listed BP rose nearly 1 percent in morning deals. The company’s share price rose more than 45% year-to-date.
Unexpected tax “necessity now”
Environmental campaign groups said BP’s third-quarter results underlined the need for a windfall tax, describing the results as a “slap in the face” for millions of Britons facing a deepening cost-of-living crisis. “The case for a bigger, bolder tax is now overwhelming,” said Sana Yusuf, energy campaigner at Friends of the Earth. “This must address the ridiculous loophole that undermines the levy by allowing companies to pay the minimum if they invest in more global warming gas and oil projects.” “Some of the billions of pounds raised should be used to pay for a street-by-street residential insulation program to reduce energy bills and reduce emissions,” Yusuf said. The burning of fossil fuels, such as coal, oil and natural gas, is the main driver of the climate crisis. “A proper windfall tax on the profits of big polluters is no longer far-fetched, it’s now a necessity,” said Jonathan Noronha-Gant, Global Witness’ senior fossil fuel representative. “But the new UK government must also urgently put us on track for a rapid transition away from dirty fossil fuels and towards renewable energy and decent home insulation so we can fix this broken energy system a forever”.
Our job is to “pay our taxes”
Speaking at the ADIPEC conference in the United Arab Emirates on Monday, BP Chief Executive Bernard Looney told a panel moderated by CNBC that he understood the public scrutiny over oil majors’ record profits, but sought to defend the company’s track record of investments and paying taxes. “We face a very difficult winter ahead in the UK, in Europe and around the world,” Looney said. “Our job is to pay our taxes, our job is to invest. We just announced a $4 billion acquisition in the United States just last week in renewable natural gas, so that’s our job. We’re going to continue to do that and to make it the best we can,” he added.
