Shell made record profits of nearly £10billion between April and June and promised to pay shareholders payouts worth £6.5billion as the oil supermajor benefited from soaring prices energy caused by the Russian invasion of Ukraine.
The FTSE 100 company made adjusted profits of $11.5bn (£9.5bn) in the second quarter of the year, beating its previous record – set between January and March – by 26%. Profits more than doubled compared to the same period in 2021.
Booming trade by Shell, BP and other major oil and gas companies contrasts with households and much of the rest of the economy, which have had to contend with higher energy prices that have driven up the inflation at 40-year highs in the UK and elsewhere, threatening to tip economies into recession across much of the world.
The scale of oil company profits prompted the UK government to finally give in to demands for a windfall tax to redistribute some of the profits, although some senior Tory ministers favor scrapping the tax , amid a leadership campaign that will lead to a new prime minister and cabinet in September.
The windfall tax – known as the energy profit levy – will not apply until July 14, meaning second-quarter earnings and shareholder payouts were unaffected.
Yet it remains a boon for Shell and its shareholders, who received $7.4 billion in the first quarter of 2022 and will receive another $6 billion through a share buyback and $1.8 billion from dividends announced Tuesday.
Shell said it experienced “higher realized prices, higher refining margins and higher gas and electricity trade”.
Vladimir Putin’s invasion has meant that Shell may have to drop its stake in the Sakhalin-2 gas project with Russia’s Gazprom. Yet the recognized costs of abandoning Russia amount to $4.3 billion, just over a third of the profits Shell has made in the three months since Kremlin troops entered Ukraine. The company had already accrued costs worth $4.2 billion related to its withdrawal from Russia, but it only increased that estimate by $111 million in the second quarter of the year.
Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
Shell said it expected the tight energy market to be here to stay. It added $4.3 billion to its income attributable to shareholders to account for higher-than-expected medium to long-term prices “reflecting current energy market demand and supply fundamentals.”
Ben van Beurden, Shell’s chief executive, acknowledged the “tremendous challenges for consumers, governments and businesses” caused by “volatile energy markets”, but argued that the company is “using its financial strength to invest in the secure energy supplies the world needs today, taking concrete and bold action to reduce carbon emissions and transform our business for a low-carbon energy future.
theguardian Gt