Global energy giant Shell has been accused of “enjoying the windfalls of war” after it revealed its annual profits doubled to a record high as a result of Russia’s invasion of Ukraine.
Shell announced on Thursday that its net profit surged to a record $39.9 billion (A$56 billion) last year, bolstered by soaring fossil fuel prices and robust demand amid Russia’s full-scale war on Ukraine.
The post-tax figure was more than double the amount achieved in 2021, the group’s earnings statement showed.
Shell’s record earnings mirror those reported by US rivals earlier this week and are certain to intensify pressure on governments to further raise taxes on the sector.
Colossal profits for energy majors have sparked public fury amid a cost-of-living crisis fuelled by sky-high energy bills that have contributed to many people struggling to make ends meet. Energy prices had begun to climb after the end of Covid lockdowns but rose sharply in March last year after the events in Ukraine led to concerns over supplies.
Opposition parties said Shell’s profits were “outrageous” and the government was letting energy firms “off the hook”. They also called for the planned increase in the energy price cap due in April to be scrapped.
London mayor Sadiq Khan tweeted: “Pensioners are afraid to put their heating on. Parents are worried about affording to heat their kids’ food. In the meantime, fossil fuel giants are making £1000 a second in profit.”
Environmental campaigner Greenpeace meanwhile on Thursday protested outside Shell’s London headquarters, arguing that the group is “profiteering from climate destruction”.
Shell said it would return a further $4 billion (A$5.6 billion) to shareholders following huge buybacks already last year – and would significantly lift its dividend – following the record earnings.
“Our results in the fourth quarter 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,” new chief executive Wael Sawan said in the results statement.
Shell is looking to reinvent itself under the company’s former renewables boss Sawan, who replaced Ben van Beurden in the top seat at the start of the year.
Despite increasingly presenting themselves as greener companies with countries slowly shifting towards a carbon net-zero world, fossil fuel production remains key to powering the global economy over the next two decades.
Shell rival BP said on Monday while a worldwide transition away from fossil fuels could be accelerated by the Ukraine-Russia war, it added in a report that “oil continues to play a major role in the global energy system for the next 15-20 years”.
The invasion a year ago of Ukraine by its neighbour Russia sent oil and gas prices rocketing.
Russia is a major producer of fossil fuels and the war resulted in slashed supplies.
RECORD US PROFITS
Shell’s update follows news Tuesday from US energy major ExxonMobil that its annual net profit hit a record at almost $56 billion, handing massive windfalls to shareholders.
This has caused US President Joe Biden to hit out at American energy giants, including Chevron, insisting they should be helping to reduce energy prices during a cost-of-living crisis.
On Tuesday Mr Biden tweeted that the only thing “stopping Big Oil from increasing production – and therefore lowering prices – is their decision to pay shareholders billions instead of reinvesting profits”.
The president’s intervention came after a White House spokesperson told the BBC that Exxon’s record profits were “outrageous”, especially after “the American people were forced to pay such high prices at the pump” in the wake of the Russian invasion of Ukraine.
In a bid to ease the pain for consumers, governments have introduced windfall taxes on the mammoth profits.
Shell has revealed that windfall taxes imposed by the European Union and UK following the surge in earnings would cost the group about $2 billion (A$2.8 billion).
“Shell has once more flexed its financial muscles on a massive scale, while riding the waves of an economic cycle which can bring major challenges as well as rewards,” Richard Hunter, head of markets at Interactive Investor, said following the results update.
“The fluctuating opinions surrounding demand from China following its reopening will continue, and there could also be bumps in the road should even a mild global recession ensue.”
– With AFP
