British energy giant Shell posted its biggest profit in its history in 2022 and announces massive reallocations to its shareholders, fueling calls for more taxes and criticism from environmental NGOs.
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Shell posted a rise in group net income to $42.3 billion, which more than doubled thanks to soaring hydrocarbon prices, which can be attributed to the recovery in post-pandemic demand and the drop in Russian exports following Moscow’s invasion of Ukraine was.
Shell’s spectacular results follow those of its American competitors. ExxonMobil on Wednesday reported record earnings of $55.7 billion for 2022, and Chevron last week reported that annual net income more than doubled to $35.5 billion.
Shell’s adjusted net income (i.e., excluding special items), the metric most closely followed by analysts, was $39.9 billion, despite an after-tax charge of $3.8 billion in 2022 related to the phase-out of oil and gas operations in Russia.
These results “demonstrate the strength of Shell’s differentiated portfolio, as well as our ability to bring life-saving energy to our customers in a volatile world,” new CEO Wael Sawan, who replaces Ben van Beurden, said in a statement on January 1.
But environmental NGOs are decrying these record profits and urging the oil giants to do more to address the climate emergency.
“Shell benefits from climate degradation and immense human suffering,” Greenpeace UK’s Elena Polisano said in a statement, whose activists demonstrated on Thursday outside the group’s London headquarters.
The NGO also says four of its activists climbed onto a Shell platform near the Canary Islands and believes world leaders should “force historic mega-polluters to set up a fund” for losses and damages , caused by the climate crisis.
“I believe the world needs a balanced energy transition,” without giving up fossil fuel investments right away, Mr. Sawan argued during an online press conference, noting that a third of the group’s investments are geared towards the energy transition be.
“I don’t think we’re moving fast enough as a planet,” he admitted, though. But to do it better, “it requires a significant change in government policy, good buy-in from customers and of course companies like ours that continue to invest,” he said.
It’s possible that Mr. Sawan, a former director of renewable energy at Shell, is “paying special attention” to the group’s energy transition, according to Interactive Investor analyst Richard Hunter.
But now, “the renewable energy market is complicated” with “unproven or simply unviable technologies making progress difficult,” continues the analyst, who notes that Shell lost $1.06 billion in the segment last year.
The UK government introduced a tax on exceptional energy gains in May, then increased it to 35% at the end of the year, as did the EU, which passed a “temporary solidarity contribution” at the end of September.
Shell said in early January it was planning a $2 billion bill for those one-off taxes in the fourth quarter and said it was reviewing its investments in the UK as a result – a process still ongoing.
“We continue to believe in the significant potential for energy investment in the UK,” but such taxes are “destabilizing for an industry that invests to be able to make a profit in 10, 15, 20 years,” he reasoned.
The oil and gas “major” on Thursday kicked off a $4 billion stock buyback program and a 15% increase in its dividend for the fourth quarter of last year.
Overall, Shell is paying out $26 billion to its shareholders for 2022, making NGOs cringe even as investors applaud, and the group’s action rose 2.73% to 2,431p just before 12pm GMT on Thursday.
For the environmental NGO Friends of the Earth, taxation needs to be accelerated. It is “just mind-blowing” to see such gains in the midst of the cost-of-living crisis, which “is leaving millions of people with the impossible choice of putting food on the table or heating their homes.”