Energy giant BP has reported a sharp drop in profits after oil prices fell last year. Profits were $13.8bn (£11bn) in 2023, down from a record $27.7bn in the previous year. Energy firms reported huge gains when oil and gas prices soared in the aftermath of Russia’s invasion of Ukraine because of fears over supplies. Despite a drop in BP’s profits, they are still – excepting the previous year – the highest seen since 2012.
The company plans to hand back $1.75bn to investors during the first three months of the year through share buybacks. It added that it was committed to $3.5bn of buybacks over the first half of 2024. However, last week it emerged that one investor group – BlueBell Capital Partners – has called on BP to scrap its targets for lower oil and gas output altogether, calling them “irrational”. 2022 surge in prices led all energy companies to make bumper profits.
The price of benchmark Brent crude oil reached nearly $128 a barrel soon after the invasion, but now stands just below $80. The UK government introduced a windfall tax, called the Energy Profits Levy (EPL), on the “extraordinary” earnings of firms on their UK operations to help fund a scheme to subsidise gas and electricity bills. BP said that its North Sea business paid $1.5bn (£1.2bn) UK tax in 2023, of which $720m was due to the EPL. The attacks led many companies, including BP, to divert ships away from the route through the Suez Canal. It is the quickest sea route between Asia and Europe and is particularly important in the transportation of oil and liquefied natural gas.
