Record British profits pumped out by Shell

Published on Thursday 31 January 2008 09:22

OIL giant Royal Dutch Shell has unveiled the biggest full-year profits ever posted by a UK company.

The firm said earnings in 2007 reached 13.9 billion – equalling 1.5 million every hour – which it said was a "satisfactory" performance.

Its latest income surge – up nine per cent on 2006 – has prompted fresh calls by unions for a windfall tax on oil companies.

And it also comes at a time when motorists are having to bear spiralling forecourt petrol prices of more than 1-a-litre as the price of crude oil rises towards $100 a barrel.

The Unite union said profits in the industry were "obscene" and urged the Government to take action, especially because of rising energy prices.

Royal Dutch Shell chief executive Jeroen van der Veer said: "Overall these are satisfactory results. We made good progress in 2007, launched new projects upstream and downstream, and achieved exploration successes."

The firm had suffered an eight per cent dip in profits in the third quarter of 2007, which it attributed partly to investment in its portfolio of assets. But the latest results effectively wiped that out, with fourth-quarter incomes surging 60 per cent ahead of last year, at 3.4 billion.

Tony Woodley, joint general secretary of the Unite union, said: "Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price ... the greedy oil companies should be asked to contribute for the common good."

The oil firms, including Shell, argue that they make very little money from forecourt operations, adding that they already pay high levels of tax to the Treasury.

In 2005, then-Chancellor Gordon Brown increased a North Sea tax on energy companies from the 10 per cent he introduced in 2002 to 20 per cent.

The boost to a better-than-expected fourth-quarter performance came from exploration and production, with the division posting 2.45bn in earnings, compared to 1.78bn a year ago.

But the company, the world's second-biggest non-government-controlled oil company by market share, also said that its spending on oil and gas projects would rise in 2008, reflecting the higher cost of getting oil out of the ground. It said capital spending over the last financial year had been much higher than had been anticipated.

Despite union calls to impose a higher windfall tax, AA spokesman Andrew Howard defended the role of oil companies, saying their main responsibility was to produce enough oil to meet world demand.

A windfall tax would just mean more money going to the Government and less spent on exploration and building new refineries, he said.

"It's a little bit unfair to criticise the oil companies," said Mr Howard. "The world market decides oil prices, not the oil companies.

"It's the world market that leads to oil companies making big profits."