BP pledges £18bn investment in UK energy as huge profits spark new call for windfall tax
BP has pledged to spend £18billion in Britain over the next eight years as it seeks to fight calls for a one-off windfall tax.
The pledge came as BP posted record underlying profit of £5bn for the first three months of this year, well ahead of analysts’ expectations of £3.6bn, and its best quarterly performance for 14 years.
The company also announced it would return £2bn to investors in the form of a new share buyback – a significant boost for the country’s pension funds.
BP posted record underlying profit of £5bn for the first three months of this year, well ahead of analysts’ expectations of £3.6bn, and its best quarterly performance for 14 years
As calls for a windfall tax on energy companies grow louder, BP outlined its spending plans, including money for North Sea oil and gas, as well as investment in wind power and electric car charging stations.
Chief executive Bernard Looney said: “We support Britain. It has been our home for over 110 years and we have been investing in North Sea oil and gas for over 50 years.
He added: “Our plans go beyond just infrastructure – they see us supporting the economy, skills and jobs in the communities where we operate. We are all part of it.
BP also said it planned to pay £1billion in tax on its North Sea profits in 2022, on top of the roughly £250million it paid each year in other UK taxes. United in recent years.
Analysts said the investment plans were “scholarly” and likely sufficient to stave off the threat of being hit by a windfall tax.
Markets.com analyst Neil Wilson said: “Rishi Sunak and Business Secretary Kwasi Kwarteng have called on energy giants to invest more in the UK.”
“I think it shows BP was listening.”
But others were more skeptical amid a cost of living crisis that has gripped the UK and left millions struggling to pay their bills.
Jenny Owen, analyst at AJ Bell, said: “BP’s earnings and cash flow are artificially inflated by the war in Ukraine, and ordinary people are already paying the price with much higher household bills.”
“Shouldn’t BP, with its broader shoulders, share the burden?”
Labor leader Sir Keir Starmer said BP’s windfall profits “strengthen the case” for a levy. He added: “With so many people struggling to pay their energy bills, we should have a windfall tax on North Sea oil and gas companies that have made more profit than they expected. “
But Prime Minister Boris Johnson refused to back down, saying a windfall tax would discourage investment in the UK and cost jobs.
He said: “If you put a windfall tax on energy companies, that means you’re discouraging them from making the investments that we want to see that will ultimately keep energy prices lower for everyone. .”
BP’s figures were boosted by high oil and gas prices during the period, with Brent Crude rising from $78 a barrel in early January to $107 a barrel in late March.
Following a price spike, the company’s oil and gas trading division stood out, generating a whopping £1.3bn profit in the quarter.
Capital markets analyst Biraj Borkhataria noted that it was rare to see strength in the oil and gas trading divisions, adding: “BP has already reported exceptional gas trading and exceptional oil trading, but not both at the same time.”
While BP posted its best underlying profit since 2008, after taking into account the £20bn cost of giving up its 19.75% stake in Russian oil producer Rosneft following the invasion of Ukraine, it recorded a quarterly loss of £16.3 billion, the largest in its history.
But investors shrugged off the loss and the shares rose 5.8%, or 22.7p, to 414.25p.