Shell records bumper profits due to soaring energy prices

Underlying income reaches $9.5 billion in the third quarter

A Shell petrol station in London. Shell plans to raise its dividend by 15 per cent for the fourth quarter. EPA

Shell has recorded its second highest quarterly profit on record due to soaring energy prices.

Underlying income hit $9.5bn (£8.2bn) in the third quarter — more than double that of the $4.2bn it made during the same period last year.

However, it was lower than the record $11.4bn profits it recorded in the second quarter, between April and June, after oil prices surged to $120 a barrel.

Energy prices have since fallen, but remain high.

“We are delivering robust results at a time of ongoing volatility in global energy markets,” Shell chief executive Ben van Beurden said on Thursday.

“At the same time we are working closely with governments and customers to address their short and long-term energy needs.”

The energy company now plans to raise its dividend by 15 per cent for the fourth quarter, subject to board approval.

Shell also said it will buy back another $4 billion of shares over the next three months, bringing the total repurchases for the year to $18.5 billion.

Still, profit came in slightly below estimates and a measure of the company’s debt levels rose unexpectedly.

The UK government has imposed a 25 per cent windfall tax on energy companies. But the tax only applies to profit made in the UK which, for most oil and gas companies, is a small part of their operations.

Shell said it does not expect to pay any extra tax this year due heavy investment in the North Sea.

Finance boss Sinead Gorman told reporters on Thursday the company had done enough over recent months to avoid the tax — which allowed companies to get tax relief in exchange for investment.

“Heavy capex (capital expenditure) has meant that we haven’t had extra tax coming through in this quarter yet,” she said. “I do expect to see that extra tax … happen quite early in the first quarter of 2023, but we’ll see what plays out with prices as well.

“We simply are investing more heavily than we have, and therefore we don’t have profits which we can be taxed against.”

Chancellor Jeremy Hunt has suggested there could be a new windfall tax on energy companies — something former prime minister Liz Truss fought vehemently against.

“I am not against the principle of taxing profits that are genuine windfalls. Nothing is off the table,” he told MPs.

Speaking on Thursday to BBC Radio 4's Today show, minister Nadhim Zahawi did not rule out an additional windfall tax, however, he also said it was important that companies still invest in the UK.

Mr Zahawi said: “I would not pre-empt any decisions but absolutely the chancellor and the prime minister will look at every decision and will, on November 17, stand up at the dispatch box … and deliver an autumn statement that demonstrates we have an energy plan that delivers energy security because what you can’t do is create a tax system that disincentivises investment.”

On Thursday Greenpeace called for a “proper tax” on the energy giant’s profits, which it said could help insulate thousands of homes.

“While Shell continues to bank billions, how many more households need to be forced into fuel poverty before the Government wakes up?” the campaign group’s UK senior climate adviser, Charlie Kronick, said.

“The only way to address the interlocking cost of living, energy security and climate crises is a street-by-street rollout of home insulation combined with a massive lift in ambition for renewable energy.”

Labour shadow climate change and net zero secretary Ed Miliband said Mr Sunak’s existing plans are a “pale imitation of Labour’s windfall tax” and would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through “ludicrous tax breaks”.

“It tells you everything you need to know about whose side this Conservative government is on that they refuse to back Labour’s proper windfall tax while working people, families and pensioners suffer.

Liberal Democrat leader Sir Ed Davey said the government’s refusal to “properly tax these eye-watering profits” was an insult to families struggling to pay their energy bills.

“Even the CEO of Shell has admitted that oil and gas companies should be taxed more to help protect vulnerable households,” he said.