BP’s profits more than doubled to $ 6.2bn (£ 5bn) in the first three months of the year, the highest quarterly profit in more than a decade, helped by soaring oil and gas prices.
Analysts had expected a figure of $ 4.5bn and the higher profit has renewed calls by campaigners for a windfall tax on oil and gas companies.
Campaigners argue that the money raised by the tax could be used to ease the burden for those hardest hit by the cost of living crisis.
The chancellor, Rishi Sunak, hinted last week for the first time that a windfall tax was a possibility if energy companies did not properly reinvest bumper profits. However, on Tuesday morning Boris Johnson argued against such a tax.
“If you put a windfall tax on 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,” the prime minister told ITV.
Frances O’Grady, the TUC general secretary, said: “At a time when households across Britain are being hammered by soaring bills and prices these profits are obscene.
“The government must stop making excuses and impose a windfall tax on oil and gas companies.”
Bernard Looney, the BP chief executive, said war in Ukraine was driving up living costs, which was “creating a terrible situation for many people around the world”. He said BP was working closely with governments on the “trilemma of delivering cleaner, reliable and affordable energy”.
He estimated that a million barrels of Russian oil a day had been removed from the market and this could double this month under existing sanctions, even before the EU decides on an oil embargo, which is supported by Germany.
BP announced a $ 2.5bn share buyback program on the back of the bumper profits. Looney has pledged that the company will buy back at least $ 1bn of shares every quarter while oil prices are above $ 60 a barrel. War in Ukraine has driven Brent crude, the global benchmark, above $ 100 a barrel.
The company also said it intended to invest up to £ 18bn in the UK’s energy system by the end of 2030, including offshore wind projects in the Irish Sea in partnership with German energy firm EnBW, and £ 1bn in electric vehicle charging points. BP is raising investment from 10% -15% of capital to 15% -20% of capital.
The UK oil group made an underlying replacement cost profit of $ 6.2bn between January and March, the biggest quarterly figure since autumn 2008, and compared with $ 2.6bn in the same quarter last year. This was driven by “exceptional oil and gas trading”, higher prices and better refining results.
Shares rose 3.5% on Tuesday, making BP the second-biggest riser on the FTSE 100 (behind BAE Systems).
Ed Miliband, Labor’s shadow climate change and net zero secretary, said: “The oil and gas firms may be doing their job for the shareholders of their companies but the government is negligently failing to do its job for the people of this country.
“The refusal to levy a windfall tax to help cut energy bills is deeply wrong, unfair and tells you all you need to know about whose side this government is on – and it’s not the British people.”
The Liberal Democrat leader, Ed Davey, said: “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. ”
The chancellor has been criticized for not doing enough to help low-income households who are struggling with rising food prices and the 54% jump in energy bills since the start of April. Sana Yusuf, an energy campaigner for the Friends of the Earth environmental group, said money raised from a windfall tax could be invested in a nationwide energy efficiency program. “A street-by-street insulation program – targeting the hardest hit first – would lower bills, help manage energy demand and improve energy security. With profits like this, it would be shortsighted to do anything less. ”
BP wrote down the value of its business in Russia, and including the resulting $ 24bn charge, reported a quarterly headline loss of $ 20.4bn, its biggest ever. The company also incurred a $ 1.1bn deferred tax liability relating to Russian withholding tax on BP’s share of Russian state-owned energy firm Rosneft’s profit.
Looney said: “In a quarter dominated by 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. ”
Along with rival Shell, BP bowed to pressure from the UK government to sever its ties with Russia after its invasion of Ukraine, and said in late February that it would offload its 19.75% shareholding in Rosneft. BP’s two directors stepped down from the Rosneft board the same day.
BP said western sanctions against Moscow meant that “it is not currently possible to estimate any value other than zero” for its Rosneft shareholding, which it could try to sell back to Rosneft at a huge discount.