BP waters down key climate target as annual profits soar to record £23 billion

BP has reported record annual profits after benefiting from runaway oil and gas prices caused by the war in Ukraine.

The energy giant said its profits more than doubled to 27.7 billion dollars (£23 billion) last year, compared with $12.8bn the year before.

The company said it would invest an additional eight billion dollars (£6.6 billion) each in the energy transition, and in oil and gas, as boss Bernard Looney promised to keep affordable energy flowing.

The London-based firm said its main measure - underlying replacement cost profit - was slightly lower in the last three months of the year compared to previous quarters at 4.8 billion dollars (£4 billion). BP said the result had been affected by its gas marketing division, which saw below average results after an exceptional third quarter.

BP chief executive Bernard Looney said: “We are strengthening BP, with our strongest upstream plant reliability on record and our lowest production costs in 16 years, helping to generate strong returns and reducing debt for the 11th quarter in a row.

“Importantly, we are delivering for our shareholders – with buybacks and a growing dividend. This is exactly what we said we would do and will continue to do – performing while transforming.”

Alongside the profit figures, BP admitted that it now expects the carbon emissions from its oil and gas production to fall by between 20-30% by 2030 when compared to 2019 levels.  Its previous target had been a 35-40% drop in emissions.

It comes as the business said that its oil and gas production will be around two million barrels of oil equivalent a day in 2030. This is 25% lower than in 2019, but its previous plan had been to cut production by 40%.

Mr Looney added: “We need continuing near-term investment into today’s energy system, which depends on oil and gas, to meet today’s demands and to make sure the transition is an orderly one.

“We have high-quality options throughout our portfolio, allowing us to choose only the best. We will prioritise projects where we can deliver quickly, at low cost, using our existing infrastructure, allowing us to minimise additional emissions and maximise both value and our contribution to energy security and affordability.”

Greenpeace UK’s head of climate justice Kate Blagojevic said: “Not only will BP’s new strategy fail to deliver much-needed energy security in the UK but it will ensure that people across the globe already battling devastating droughts, floods and heatwaves, will continue losing their lives and livelihoods.”

Calls for windfall tax

The massive profit comes just a week after Shell reported its highest profit in history of nearly $40 billion, sparking calls for an additional windfall tax.

Shadow climate secretary Ed Miliband has called on the government to bring forward a “proper” windfall tax on energy companies after BP reported that underlying profit more than doubled last year.

The Labour MP said: “It’s yet another day of enormous profits at an energy giant, the windfalls of war, coming out of the pockets of the British people. What is outrageous is that as energy giants rake in these sums, Rishi Sunak still refuses to bring in a proper windfall tax.

“This is why people are sick and tired of the way the country is run under the Tories. In just eight weeks time, the government plans to allow the energy price cap to rise to £3,000. Labour would use a proper windfall tax to stop prices going up in April.”

TUC general secretary Paul Nowak, accused BP of “laughing all the way to the bank” after the latest BP profit figures were unveiled, while millions are left struggling to heat their homes.

He said: “Hard-pressed families will rightly feel furious – they are being treated like cash machines. This boils down to political choices. Ministers are letting big oil and gas companies pocket billions in excess profits. But they are refusing to give nurses, teachers and other key workers a decent pay rise.

“We need a government on the side of working people, not fat cat energy producers. That means imposing a higher windfall tax on the likes of BP and Shell. It means giving public servants fair pay. And it means giving households extra financial support as bills rise this April.”

Meanwhile, the UK’s leading progressive think tank IPPR called for the government to introduce a tax on share buyback schemes in response to BP making record profits last year.

Joseph Evans, researcher at IPPR, said: “While bill-payers across the UK are struggling with soaring costs, BP’s shareholders are reaping enormous payouts. After the oil giant made record profits in 2022 it passed an extraordinary £9.35 billion directly back to shareholders through share buybacks. That’s a scandalous use of surplus cash which could have been used to lower bills, or invested in the green transition.

“America and Canada are already taking action on excessive shareholder payouts: it’s long overdue for the government to follow suit by introducing a tax on share buyback schemes.”