Shell reveals record first quarter profits as calls for windfall tax grow

Shell has revealed record first-quarter profits thanks to soaring oil and gas prices in an update set to further fuel demands for a windfall tax on the sector.

The oil giant joined rival BP in posting better-than-expected underlying earnings for the first three months of 2022, at 9.1 billion US dollars (£7.2 billion) – nearly three times the 3.2 billion dollars (£2.5 billion) reported a year earlier.

It comes as calls mount from Labour and the Liberal Democrats for a windfall tax on oil and gas firms to help ease the cost-of-living crisis.

The sector is reaping the benefits of rocketing oil and gas prices, which have been pushed to record levels by Russia’s invasion of Ukraine and surging demand as economies emerge from the pandemic.

Oil prices were already rising before the Ukraine war as economies started to recover from the Covid pandemic.

Chancellor Rishi Sunak has so far resisted pressure to make the firms pay more tax, instead looking to companies making big profits to invest the cash back into the UK.

Lib Dem leader Sir Ed Davey condemned the Government’s refusal to consider the move.

He said: “Boris Johnson and Rishi Sunak’s refusal to tax the super-profits of energy companies is completely unforgivable when people are too terrified to heat their homes.

“The excuses of Conservative ministers have been demolished by the boss of BP himself, who said a windfall tax wouldn’t damage investment in the UK.

“This one-off levy would raise billions of pounds that could help vulnerable families with their energy bills now. It is a no-brainer.”

Campaign group Greenpeace said a windfall tax would be the “fastest and fairest way to ease pressure on households feeling the pinch and reduce our dependence on oil and gas”.

Greenpeace UK’s oil and gas campaigner, Philip Evans, said: “By using a big chunk of the bloated profits that Shell, BP and others are raking in to make homes warmer, more energy-efficient and kitted out with heat pumps, the Government could start to really tackle the climate and cost-of-living crises simultaneously.”

Ben van Beurden, chief executive of Shell, said: “The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted.

“The impacts of this uncertainty and the higher cost that comes with it are being felt far and wide.

“We have been engaging with governments, our customers and suppliers to work through the challenging implications and provide support and solutions where we can.”

Like its FTSE 100 Index rival BP, Shell’s figures also showed a hit from its move to pull out of Russia due to the Ukraine war as it booked a 3.9 billion dollar (£3.1 billion) charge.

Despite this, it still saw current cost of supply (CCS) earnings attributable to shareholders jump to 5 billion dollars (£4 billion) in the quarter, up from 4.3 billion dollars (£3.4 billion) a year ago, though it was down 38% on the previous three months.

Shell rivals, including BP and TotalEnergies have also reported a sharp rise in profits.