6 February 2024, 07:10 GMTUpdated 20 minutes agoImage source, Getty ImagesEnergy company BP has reported a significant decrease in profits after a drop in oil prices in 2023. The company’s profits were $13.8bn (£11bn) in 2023, down from a record $27.7bn in the previous year. When oil and gas prices soared due to fears over supplies after Russia’s invasion of Ukraine, energy firms reported substantial gains. Although household energy bills have decreased since 2022, they remain high. These results are the first to be released by BP since the announcement of Murray Auchincloss as its new chief executive. BP’s profit decline is in line with the results from competitor Shell, which posted profits of $28.2bn, down from $39.9bn in 2022. Despite the drop, BP’s profits, with the exception of last year, are the highest seen since 2012. The company plans to hand back $1.75bn to investors through share buybacks in the first three months of the year and is committed to $3.5bn of buybacks in the first half of 2024.BP also anticipates “underlying production from oil production and operations to be higher” this year, while production from gas and low carbon energy is expected to be lower. Last year, BP faced criticism from environmental groups after it scaled back plans to reduce its oil and gas production by 2030. Global Witness, a campaign group, expressed disapproval of BP’s latest results and emphasized the need for a rapid clean energy transition. Despite this, one investor group, BlueBell Capital Partners, has urged BP to abandon its targets for lower oil and gas output, calling them “irrational”. Energy prices began to rise once Covid lockdowns were lifted, but surged in March 2022 following Russia’s assault on Ukraine. The surge in prices led to bumper profits for all energy companies. In response, the UK government introduced the Energy Profits Levy (EPL) to tax the “extraordinary” earnings of firms on their UK operations and support a scheme to subsidize gas and electricity bills. BP revealed that its North Sea business paid $1.5bn (£1.2bn) in UK tax in 2023, with $720m attributed to the EPL. The year before, it paid $2.2bn in tax for its North Sea operations, including $700m from the EPL. Concerns arose about oil prices surging due to attacks on shipping in the Red Sea by Houthi rebels, but so far, they have remained relatively stable. These attacks prompted several companies, including BP, to reroute ships away from the Suez Canal, an important route for the transportation of oil and liquefied natural gas between Asia and Europe.
