Shell profits double to nearly $40 billion

Hong Kong/London

Shell sets record Profits of nearly $40 billion in 2022 are more than double the previous year’s profit after oil and gas prices soared following Russia’s invasion of Ukraine.

Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday, more than double the $19.3 billion it posted in 2021, buoyed by a strong performance in its natural gas trading business. Shares in the company were up 2.6% in midday trading in London.

More than 40% of Shell’s annual earnings come from its integrated natural gas business, which includes trading of liquefied natural gas. The unit contributed nearly two-thirds of Shell’s $9.8 billion profit in the final three months of the year.

Shell chief executive Wael Sawan said the result “demonstrates the strength of Shell’s differentiated product portfolio and our ability to deliver vital energy to our customers in a turbulent world.”

The gains are the latest in a string of record performances by the world’s largest energy companies, which have racked up fat profits on the back of soaring oil and gas prices.

Exxon this week reported record full-year earnings of $59.1 billion. Last month, Chevron (CVX) reported a record full-year profit of $36.5 billion.

This has led to renewed calls for higher taxes. The European Union and British governments already impose a windfall tax on oil company profits, with the proceeds used to help households struggling with rising energy bills.

Shell said it expected to collect an additional $2.3 billion in taxes and fees 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, expected to be completed in May, and confirmed a 15% increase in its fourth-quarter dividend per share.

The company returned $26 billion to shareholders in 2022 through share repurchases and dividend payments.

By comparison, the company spent about $21 billion last year on low- or zero-carbon businesses, about a third of total spending, Chief Financial Officer Sinead Gorman told reporters on a conference call Thursday.

Of this, approximately $4 billion was invested in its renewable energy and energy solutions business, which includes power generation, hydrogen production, carbon capture and storage, and carbon credit trading.

The unit will generate less than 5% of group profits in 2022, underscoring the scale of the challenge Shell faces as it tries to shift from oil and gas to low-carbon energy.

On Thursday, the company was criticized by climate activists for not acting quickly enough.

“Shell cannot claim to be in transition as long as investment in fossil fuels dwarfs investment in renewable energy,” Mark van Baal, founder of shareholder activist group Follow This, said in a statement.

“The majority of Shell’s investments are still related to its fossil fuel business, as the company has no target to cut its total CO2 emissions this decade.”

Shell invested about $12.4 billion in 2022 into its integrated gas and oil exploration unit.

Asked whether Shell could invest more in renewable energy, Savan said he believed the company was “finding the right balance in our capital allocation”.

Shell is on track to halve emissions from its own operations by 2030, compared with 2016 levels, he said. Over 90% of Shell’s emissions come from customers’ use of its products. 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.

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