BP profits soar as calls for windfall tax grow

BP profits soar as calls for windfall tax grow

BP’s profits for the first three months of this year have more than doubled after oil and gas prices soared.

The energy giant reported an underlying profit of $6.2bn (£4.9bn) compared to $2.6bn in the same period last year – ahead of expectations.

BP said the increase was due in part to “exceptional oil and gas trading”, but rising profits have prompted calls for a one-off windfall tax in the UK on energy companies to help households grappling with rising bills.

BP’s profits have been driven by a sharp rise in oil prices, initially led by increased demand as economies reopened following Covid lockdowns. Last November, BP chief Bernard Looney described the energy market as “a cash machine”.

Oil prices rose further after war broke out in Ukraine and western countries imposed sanctions on Russia following its invasion. Russia is the second biggest exporter of crude oil, and is also the world’s largest natural gas exporter.

Labour leader Sir Keir Starmer said BP’s profits – which beat analysts’ expectations of $4.5bn – “reinforce the case that we’ve been making which is that, with so many people struggling to pay their energy bills, we should have a windfall tax on oil and gas companies in the North Sea who have made more profit than they were expecting”.

Italy has said it will increase its tax on energy companies’ windfall profits from 10% to 25%, but the UK government is not in favour of such a charge.

Prime Minister Boris Johnson said a windfall tax would hamper investment and keep oil prices higher over the long term.

He said: “If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody.”

Chancellor Rishi Sunak has previously said he would explore a windfall tax policy if companies did not invest enough in the UK’s energy supply.

On Tuesday, BP announced plans to invest £18bn in green and fossil fuel operations in the UK by the end of the decade.

But it also said it would buy back another $2.5bn of its shares and keep dividends – payments to shareholders – at 5.46 cents a share.

BP says it expects to pay £1bn in taxes for its 2022 North Sea profits, on top of around £250m that it has paid annually in other taxes in the UK in recent years.

Mr Looney 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.”