Energy companies’ profits 2022: who owns BP, Shell, Centrica - and why are they making so much money?

BP recently reported that its profits have more then tripled as households in the UK warned energy bills could cost over £3,000 this winter

The news comes as households around the UK face ever increasing energy bills, with analysis by energy consultant Cornwall Insight warning that some could be facing an annual energy bill of £3,615 this winter.

This is how much energy companies’ profits have increased - and how they’re making so much money.

BP

BP has revealed second-quarter profits more than trebled to a 14-year high as it joined Shell in reaping the benefits of soaring oil and gas prices.

The oil giant reported underlying replacement cost profits – its preferred measure – jumping to a far better-than-expected 8.5 billion US dollars (£6.9 billion) for the three months to June 30, up from 2.8 billion US dollars (£2.3 billion) a year ago.

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BP delivered cheer to investors, with a 10% rise in the dividend shareholder payout and by ramping up its share buyback plan with another 3.5 billion US dollars (£2.9 billion) due before the end of September.

The price of Diesel and Unleaded Petrol fuels are displayed on a sign outside a BP petrol station near Stoke-on-Trent, central England on June 7, 2022 (Photo by PAUL ELLIS/AFP via Getty Images)

The company warned that there is not expected to be any let up with energy prices over the summer, forecasting that crude oil and gas prices will remain high over the third quarter due to supply disruption from Russia.

BP chief executive Bernard Looney insisted the group was continuing to “perform while transforming”.

He said: “Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy.

“We do this by providing the oil and gas the world needs today – while at the same time, investing to accelerate the energy transition.”

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Shell

Shell reported that it would return billions of dollars to its shareholders as it continued to profit from massive energy price hikes following the Russian invasion of Ukraine.

The business said it would buy back six billion dollars (£4.9 billion) worth of shares from its investors, as earnings beat expectations.

Adjusted earnings hit nearly 11.5 billion dollars (£9.5 billion) for the second quarter of the year, compared with the less than 11 billion (£9 billion) that analysts had forecast.

Logo of British multinational oil and gas company Shell (Photo by ASTRID VELLGUTH/AFP via Getty Images)

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It is a record second quarter result for the business.

“With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike,” said chief executive Ben van Beurden.

“Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future.”

Centrica

British Gas owner Centrica’s half-year profit soared five-fold to £1.3 billion, and revealed that it would start paying dividends to shareholders for the first time since 2020 – as its oil and gas arm turned a massive profit.

While British Gas struggled to deal with higher energy prices, Centrica benefitted from its investment elsewhere.

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The energy giant said its upstream business, which includes its North Sea operations, saw adjusted operating profit reach £906 million in the first six months of the year – an increase of more than 1,100%.

The Centrica logo is displayed on a wall outside the head office in Windsor, England (Photo by Scott Barbour/Getty Images)

Centrica chief executive Chris O’Shea said: “I know it’s difficult to see the word profits, or dividends, or similar words when people are having a tough time. I’m very conscious of this.

“Bear in mind, over the next couple of years we are expecting to pay a windfall tax of probably well over £600 million on our UK gas business off the back of the profits that we’re seeing, so a lot of this is going back into society.”

Who owns BP, Shell and Centrica?

Bernard Looney is BP’s chief executive, and Helge Lund is the company’s chairman. According to BP’s annual report, some of the major shareholders listed included Vanguard, BlackRock, Norges Bank, JPMorgan Chase Banks, National Farmers Union Insurance Mutual Society, Barclays and Halifax Share Dealing Services.

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BP CEO Bernard Looney (Photo by DANIEL LEAL/AFP via Getty Images)

Shell is headed up by Ben van Beurden as CEO, and Andrew Mackenzie as chairman. Shell’s biggest shareholders include Fisher Asset Management, Dimensional Fund Advisors, Fidelity Management & Research Co, Wellington Management, Norges Bank Investment Management and Arrowstreet Capital.

Chris O’Shea is Centrica’s chief executive and Scott Wheway is its chairman. Schroder Investment Management is currently Centrica’s largest shareholder, with 9.2% of shares outstanding as of April 2022.

Why are profits skyrocketing?

The increase in profits for energy firms has been triggered by the higher prices for oil and gas, which have spiked following pandemic lockdowns and the Russian invasion of Ukraine.

Russia has reduced supplies to Europe amid the war, and there are concerns that it may cease supplies completely.

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With gas supply problems meaning that there is potential for wholesale prices to soar, companies have been passing these costs onto their customers, sharply increasing household energy bills by massive amounts.

Higher oil prices have also led to a knock-on effect of higher petrol and diesel prices, resulting in record highs.

What’s been said about the profits?

Doug Parr, chief scientist for Greenpeace UK, said: “While households are being plunged into poverty with knock-on impacts for the whole economy, fossil fuel companies are laughing all the way to the bank.

“The Government is failing the UK and the climate in its hour of need.

“Government must bring in a proper windfall tax on these monster profits and stop giving companies massive tax breaks on destructive new fossil fuel investments.

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“This could unlock billions of pounds to alleviate household bills and fund a nationwide roll-out of home insulation which would keep bills low for good and get our UK fossil gas use under control.”

Demonstrators hold placards during The People’s Assembly Cost of Living Crisis protest on April 2, 2022 in London, England (Photo by Hollie Adams/Getty Images)

Ecotricity founder Dale Vince said it is “hard to have sympathy for BP”, telling BBC Radio 4’s Today programme: “They are holding a shedload of money that simply is coming from hard-pressed bill-payers in our country.”

He said he thinks it is time to increase the windfall tax, adding: “Clearly there are exceptional windfall profits in the oil and gas sector, and clearly there’s a problem in the energy market, and we should fix one with the other.”

Asked how worried he is about the number of customers who will struggle to pay their bills, Vince said: “It’s an exceptional problem. And this is why I think the Government should step in, like they did with the pandemic.

“We spent £400 billion as a country to get ourselves through the pandemic more or less whole.

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“We need to spend a tenth of that to get millions of families through this winter against exceptional energy prices which will have tripled in just 12 months.

“If you’re on a salary of around £20,000 you need a 10% pay rise just to pay for the increase in energy bills, just for that.”

Protesters attend a demonstration in Parliament Square about the rising cost of living and energy bills (Photo by Chris J Ratcliffe/Getty Images)

Friends of the Earth energy campaigner Sana Yusuf said: “Clearly not everyone is struggling with the energy crisis.

“These bumper profits will be greeted with disbelief by the millions of people across the UK who are faced with rocketing energy prices.

“The Government must impose a tougher windfall tax on energy firms.

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“The bulk of these profits should be used to insulate our homes and help cash-strapped households pay for their heating this winter, rather than developing more fossil fuel projects that roast the planet.”

Frances O’Grady, the general secretary of the Trades Union Congress, said: “These eye-watering profits are an insult to the millions of working people struggling to get by because of soaring energy bills.

“Working people are facing the longest and harshest wage squeeze in modern history. It’s time working people got their fair share of the wealth they create, starting with real action to bring bills down.”