Oil company BP has posted a record profit of $28 billion for 2022 on higher energy prices and raised its dividend by 10 per cent.
BP's underlying replacement cost profit, the company's definition of net income, surged to $27.65 billion last year, from $12.82 billion in 2021.
The London-based company’s fourth-quarter profit of $4.8 billion beat analysts’ estimates of a gain of $4.7 billion.
Brent, the benchmark for two thirds of the world’s oil, closed in on a record high of $147 a barrel after Russia’s invasion of Ukraine last year.
Oil prices have since given up most of their gains and are now trading in the range of $80 to $85 a barrel.
“We are strengthening BP, with our strongest upstream plant reliability on record and our lowest production costs in 16 years, helping to generate strong returns and reducing debt for the 11th quarter in a row,” said chief executive Bernard Looney on Tuesday.
“Importantly, we are delivering for our shareholders — with buybacks and a growing dividend. This is exactly what we said we would do and will continue to do — performing while transforming.”
The company raised its dividend by 10 per cent to 6.61 cents per ordinary share and announced another share buyback of $2.75 billion.
BP said it would increase investment in “high quality” oil and gas projects by up to $1 billion a year, or a cumulative $8 billion until 2030.
“The investment will help to meet near-term demand for secure supplies of oil and gas, generating additional earnings that can further strengthen BP and support investment in its transition,” the company said.
BP expects to retain some oil and gas assets “longer than previously envisaged” due to improving commercial conditions over the past four years.
“We need continuing near-term investment into today’s energy system — which depends on oil and gas — to meet today’s demands and to make sure the transition is an orderly one,” said Mr Looney.
His remarks come against the backdrop of a global energy crisis, mainly resulting from chronic underinvestment in oil and gas projects.
Oil and gas upstream investment needs to increase and be sustained near the pre-coronavirus levels of $525 billion through 2030 to ensure market balance, according to the International Energy Forum.
Upstream investment in 2021 was depressed for a second consecutive year at $341 billion — about 25 per cent below 2019 levels.
The fossil fuel industry has come under increasing pressure from governments and the public as companies rake in multibillion dollar profits.
“It’s yet another day of enormous profits at an energy giant, the windfalls of war, coming out of the pockets of the British people,” Britain's shadow climate change secretary Ed Miliband said in a Tweet on Tuesday.
“What is outrageous is that as energy giants rake in these sums, [British Prime Minister] Rishi Sunak still refuses to bring in a proper windfall tax.”
The UK has increased the Energy Profits Levy on oil and gas companies to 35 per cent, from 25 per cent, taking the total tax on the sector to 75 per cent.
“The big 5 oil companies handed well over $100 billion to wealthy shareholders last year. They are cash machines for the rich,” Nick Dearden, director of campaign group Global Justice Now, said on Twitter.
Fiona Duggan, policy lead at climate solutions charity Ashden, said the UK government has a duty to close the “loophole” in the windfall tax and use that money to reduce the cost-of-living crisis.
Last week, Shell reported a record 2022 profit of $40 billion as it benefitted from higher oil and gas prices.
Shell's full-year earnings of $39.87 billion — one of the biggest profits reported by a British company — beat the London-listed company's previous record of $28.4 billion set in 2008.
