BP expectes to pay £700m in UK windfall tax this year after quarterly profits more than double to above £7billion. The London-listed oil giant said underlying replacement cost profits – a measure preferred by the firm – jumped to £7.1billion ($8.2billion) in the July to September period from £2.9billion ($3.3billion) a year earlier. This was a long way ahead of the £5.3billion ($6.1billion) forecasted by market analysts. But the firm still insisted profits were weaker than the previous three-month period following a fall in the average price of oil.
BP also confirmed it expected to pay around £693m ($800m) in UK windfall tax this year, a levy introduced by the government in May.
The tax – introduced when Rishi Sunak was Chancellor – applies to profits made from extracting UK oil and gas.
The oil giant told shareholders it will pay out £2.2billion ($2.5billion) in taxes for its UK North Sea business this year, as well as £695million ($800million) of tax related to the energy profits levy.
ITV Political Editor Robert Peston tweeted: “BP made 3-month profit of $8.2bn, which was all cash, and is giving $2.5bn to shareholders via a share buyback.
“Giving away $2.5bn rather than investing it looks like an invitation by BP to a cash-strapped Sunak government to raise the 25 percent rate of the ‘windfall’ oil and gas tax.”
Dr George Dibb, head of the Centre for Economic Justice at the IPPR think tank, said: “Companies like BP are making huge profits and channelling these straight back to already-wealthy shareholders through share buyback schemes.
“Instead of reducing costs for consumers or investing in renewable energy, these fossil fuel giants are prioritising transfers to shareholders. BP has announced a new buyback programme today of $2.5bn, totalling $8.5bn this year alone.
“There is an alternative. The US have recently levied a tax on share buybacks and the UK should follow suit.
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“A 25 percent windfall tax on the share buybacks of BP and Shell would raise up to £4.8billion per year for the treasury. Taxes which could be spent on supporting households across the UK.”
Friends of the Earth energy campaigner Sana Yusuf said: “With the economy sinking, energy bills soaring and the climate crisis deepening, Rishi Sunak must surely act on the excessive profits that fossil fuel firms like BP are raking in.
“The case for a bigger, bolder windfall tax is now over-whelming. This must address the ridiculous loophole that undermines the levy by enabling companies to pay the bare minimum if they invest in more planet-warming gas and oil projects.
“Some of the billions of pounds raised should be used to pay for a street-by-street, home insulation programme to cut energy bills and reduce emissions.
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“As well as providing long-term financial relief to households – especially those most in need – this would boost energy security, cut our gas reliance and help the UK meet legally binding climate targets.”.
BP chief executive officer Bernard Looney praised the positive financial results but insisted the firm “remains focused on helping to solve the energy trilemma”.
He said: “This quarter’s results reflect us continuing to perform while transforming. We remain focused on helping to solve the energy trilemma – secure, affordable and lower carbon energy.
“We are providing the oil and gas the world needs today – while at the same time investing to accelerate the energy transition. Our agreement on Archaea Energy is the most recent step in our strategic transformation of BP.”
In June, the cost of a barrel of Brent crude oil had hovered around $114 per barrel but since early July, that price had rarely risen above the $100 mark.
But today that has fallen further, with a barrel of crude oil costing around $94 (£81).
Despite this, energy prices remain extremely high following Russia’s invasion of Ukraine in February, which is continuing to weigh heavily on the budgets of millions of households.
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