Shell made a record a profit of nearly $40 billion in 2022, more than double what it made the year before after oil and gas prices spiked following Ukraine’s invasion of Ukraine. Russia.
Europe’s biggest oil company by revenue reported adjusted annual profit of $39.9 billion on Thursday – more than double the $19.3 billion it posted in 2021 – thanks to a solid performance of its gas trading activity. The company’s stock was up 2.6% in London at midday.
Just over 40% of Shell’s annual profits came from its integrated gas business, which includes liquefied natural gas trading operations. The unit was responsible for nearly two-thirds of Shell’s $9.8 billion profit in the last three months of the year.
Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our ability to deliver vital energy to our customers in a volatile world.”
The earnings are the latest in a series of record results from the world’s largest energy companies, which have made windfall profits on the back of soaring oil and gas prices.
ExxonMobil posted record annual earnings of $59.1 billion this week. Last month, Chevron (CVX) reported record annual earnings of $36.5 billion.
This has led to renewed calls for increased taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.
Shell said it plans to levy an additional tax burden of $2.3 billion in 2022 related to the EU Windfall Profits Tax and the UK Energy Profits Tax. The company paid $13.1 billion in taxes worldwide in 2022.
Shell also announced another $4 billion share buyback program it expects to complete by May and confirmed it would increase its dividend per share by 15% for the fourth quarter.
The company returned $26 billion to shareholders in 2022 through share buybacks and the payment of dividends.
By comparison, it spent about $21 billion on its low- or zero-carbon operations last year, about a third of total spending, Chief Financial Officer Sinead Gorman told reporters on Thursday.
Of that, about $4 billion was invested in its Renewables and Energy Solutions business, which includes power generation, hydrogen generation, carbon capture and storage, and carbon credit trading.
The unit generated less than 5% of group profits in 2022, underscoring the scale of the challenge Shell faces as it tries to transition from oil and gas to low-carbon energy.
The company on Thursday drew criticism from climate activists for not acting quickly enough.
“Shell cannot claim to be in transition as long as fossil fuel investments eclipse renewable energy investments,” Mark van Baal, founder of activist shareholder group Follow This, said in a statement.
“The bulk of Shell’s investment remains tied to fossil fuel companies as the company does not aim to reduce its total CO2 emissions this decade.”
Shell has invested around $12.4 billion in its integrated oil and gas exploration units in 2022.
Asked if Shell could invest more in renewables, Sawan said he thought the company was “finding the right balance in our capital allocation”.
He said Shell was on track to halve emissions from its own operations by 2030 compared to 2016 levels. More than 90% of Shell’s emissions come from the use of its products by customers. . It plans to reduce these so-called “Scope 3” emissions by 20% by 2030.
Shell plans to become a net zero emissions company by 2050.
Greenpeace activists are staging a protest this week against a Shell-contracted ship in the Atlantic Ocean carrying equipment to redevelop the Penguins oil and gas field in the North Sea. The environmental group said in a statement that the protest was intended to “highlight the global climate devastation caused by Shell”.
In a statement shared with CNN, a Shell spokesperson said the activists boarded “a moving vessel in difficult conditions” and “caused real security concerns.”
“Projects like Penguins… help reduce the UK’s reliance on higher carbon and more expensive energy imports. Local and responsible oil and gas production is essential for security. UK energy source and fully compatible with a net zero pathway,” the spokesperson added.