BP: expecting to pay up to £1bn tax on North Sea profits this year
Perhaps stung by criticism of its profitability, BP says it expects to pay up to £1bn in taxes for its 2022 North Sea profits.
That’s on top of around £250m that it has paid annually in other taxes in the UK in recent years, it adds.
BP results out this morning. Company says “bp… anticipates paying up to £1 billion in taxes for its 2022 North Sea profits, on top of around £0.25 billion that it has paid annually in other taxes in the UK in recent years.” Oil bosses seemingly rattled by talk of windfall taxes
— Simon Neville (@SimonNeville) May 3, 2022
Green Party MP Caroline Lucas, though, is also arguing for a windfall tax to help struggling families:
Soaring gas prices mean BP profits of $6.2bn in first 3 months of 2022, while millions struggle to make ends meet. Government refusal to levy #WindfallTax on obscene profits & support those with huge energy bills shows whose side they’re on -it’s grotesque https://t.co/ofnZc2O2gB
— Caroline Lucas (@CarolineLucas) May 3, 2022
BP to invest up to £18bn in UK energy system by 2030
BP has also outlined plans to invest up to £18bn in the UK’s energy system over the next eight years, insisting it is ‘backing’ the country.
The oil giant says it plans to continue investing in North Sea oil and gas, and also develop lower carbon energy investments in the UK.
Those projects will include offshore wind, electric vehicle charging (where it announced a £1bn rollout in March), and two large-scale hydrogen production facilities in Teesside, as well as developing its network of fuel stations across the UK.
Bernard Looney, chief executive officer of bp, said:
“We’re backing Britain. It’s been our home for over 110 years, and we’ve been investing in North Sea oil and gas for more than 50 years. We’re fully committed to the UK’s energy transition – providing reliable home-grown energy and, at the same time, focusing on the drive to net zero.
And we have ambitious plans to do more and to go faster. Our plans go beyond just infrastructure – they see us supporting the economy, skills development and job opportunities in the communities where we operate. We are all in.”
Under threat of UK windfall tax, BP sets out plan to invest ‘up to £18bn’ in UK this decade on North Sea oil and gas, offshore wind, hydrogen and CCS, EV charging, retail and convenience stores…
— Douglas Fraser✒️🎥🎙 (@BBCDouglasF) May 3, 2022
Last week, business minister Kwasi Kwarteng wrote to the North Sea oil and gas industry asking it to set out a clear plan to reinvest its profits into British energy projects.
BP’s plans for the North Sea include:
- Developing lower emission oil and gas projects to support near term security of supply, for example, at the Murlach, Kate and Mungo fields around the bp-operated ETAP hub in the central North Sea and the Clair and Schiehallion fields West of Shetland.
- Investing in exploration around its existing North Sea hubs.
- Progressing asset electrification projects in the Central North Sea and West of Shetland to further reduce operational emissions and supporting the North Sea Transition Deal.
Liberal Democrat Leader Ed Davey is also calling for a windfall tax on energy firms:
“The Conservative government’s refusal to introduce a windfall tax on the super profits of oil companies is becoming impossible to justify.
BP is raking in eye-watering profits while millions of people struggle to pay the bills. It is an unforgivable lack of leadership from Boris Johnson at a time of national crisis.
Oil companies are handing out huge dividends and buying back shares, they could easily afford to pay a little more to help the most vulnerable.
Labour’s shadow chancellor, Rachel Reeves, says the case for a windfall tax to help families strugging with higher energy bills ‘cannot be ignored’:
NEW: $6.2bn profits for BP in first three months of this year.
The case for a one-off windfall tax on oil & gas producer profits cannot be ignored.
Yet still the Tories won’t back Labour’s plan to use it to cut energy bills.
On Thursday #voteLabour for a party on your side.
— Rachel Reeves (@RachelReevesMP) May 3, 2022
Introduction: BP underlying profits more than double on soaring energy prices
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
BP has more than doubled its underlying profits as the Ukraine war drove up energy prices… and taken a mammoth hit from quitting Russia.
Underlying replacement profits at the oil company jumped to $6.245bn (£5bn) in the first quarter of the year, a time in which crude oil prices touched their highest levels since 2008, and gas prices hit records.
That’s up from $2.63bn in the same quarter a year ago, and $4.065bn in the last three months of 2021, BP’s latest financial results, just released, show.
Reuters reports it’s the highest underlying profits in more than a decade, and it’s well ahead of City expectations of around $4.5bn in underlying earnings.
BP says the jump in profits was driven by “exceptional oil and gas trading, higher oil realizations and a stronger refining result”.
But it has also taken charges totalling $25.5bn to cover its exit from Russia, where it is abandoning its stake in Rosneft.
That has pushed the company into a huge reported loss of $23bn, on a replacement cost basis.
#bp loss $20.4 billion underlying profit $6.2 billion versus forecast of $4.5 billion. Huge impairment because of Rosneft. Massive underlying profit exceeding expectations.
— Ronnie (@Ronniemarkets) May 3, 2022
BP’s CEO Bernard Looney says:
In a quarter dominated by the tragic events in Ukraine and volatility in energy markets, bp’s focus has been on supplying the reliable energy our customers need.
Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today.
BP has also announced a new $2.5bn share buyback, which will funnel some of its profits back to shareholders.
During the first quarter bp generated surplus cash flow of $4.1bn and intends to execute a $2.5bn share buyback prior to announcing its second quarter results.
BP’s bumper earnings will renew pressure for a windfall tax on energy firms, to help energy companies to help UK households grappling with rising household bills.
Business secretary Kwasi Kwarteng quashed the idea on Sunday, saying it would discourage new projects, after chancellor Rishi Sunak suggested he’d look at it if firms didn’t make more investment in new oil and gas extraction.
Highest BP profits in a decade – $6.2bn for first quarter of this year
.. & Windfall tax calls to grow louder— Ben Quinn (@BenQuinn75) May 3, 2022
Italy has shown it can be done. Yesterday, Mario Draghi’s government unveiled a €14bn package of support for vulnerable families and businesses facing surging commodity prices following the war in Ukraine.
It will be partly funded by a 25% tax on energy groups windfall profits, up from the 10% first planned.
Also coming up today
The latest manufacturing PMI report will show how UK factories fared in April, as concerns grow that Britain could slide into recession this year.
Worries about the health of the global economy rose yesterday, as data showed that eurozone manufacturing output stalled in April. In China, factory activity contracted at the fastest rate in two years.
The FTSE 100 is expected to drop around 0.8% as City traders return to their keyboards after the Bank Holiday break, catching up with losses in European markets on Monday. But other markets are seen opening higher, after a late rebound on Wall Street last night.
#Dow makes 612-point turnaround as Nasdaq leads rebound in final hour of trading.
— Stock Master (@StockMasterLive) May 2, 2022
European finance ministers will discuss proposals for banking union on a video call today. Ireland’s Paschal Donohoe, who chairs the eurogroup, is pushing for a common deposit insurance fund to ensure depositors’ funds across the bloc.
Bloomberg explains:
Eurogroup President Paschal Donohoe has been outlining his plans to break the impasse over the past few days and will present his ideas to euro-area finance ministers in a video conference on Tuesday.
He wants to have a common European deposit guarantee fund in place, at least in embryonic form, by 2024 to bring added protection for savers and to strengthen the European banking system, according to the proposal seen by Bloomberg.
The agenda
- 8.55am BST: German unemployment report for April
- 9.30am BST: UK manufacturing PMI for April
- 9.30am BST: Hong Kong GDP report for Q1 2022
- 10am BST: Eurozone unemployment report for March
- 3pm BST: Eurogroup ministers hold videoconference on plans for Banking Union
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