May 4, 2022

BP announces £5 billion in profit for first three months of 2022

Oil giant BP has just announced it made underlying profits of nearly £5 billion in the last three months. At the same time, UK families and businesses face soaring energy bills.

The UK government is refusing to impose a windfall tax on the billions made by companies like BP because, it says, we need them to invest in UK energy security. “If you put a windfall tax on the energy companies,” the Prime Minister said yesterday, “what that means is that you discourage them from making the investments that we want to see.”

But a lot of what BP is investing in the UK has almost no public benefit.

Take its huge North Sea oil field, Clair (next to Shell’s Cambo field). This is oil for export – the UK exports 80% of all North Sea oil – earning BP vast amounts of profits, but contributing next to nothing to UK energy security. New domestic production won’t lower energy bills either.

Increasing the UK’s supply of renewable energy, though, would cut our energy costs. But oil and gas companies are still dragging their feet when it comes to transitioning to renewables. BP spent 12 times as much developing oil and gas projects in 2021 as it did on renewable energy. BP's global spending on renewables as a share of its total spend has increased less than 4 percentage points since the Paris Agreement was signed in 2016, to just over 7% last year (1).

Trying to cajole the UK’s oil and gas industry into investing in renewables is a fool’s game: the vast majority of North Sea operators raking in these vast profits invest absolutely nothing in UK renewable energy. Of the 49 current oil and gas producers in the North Sea, only 11 companies also generate renewable energy in the UK. That doesn’t mean that the power they produce reaches UK households, though: some produce electricity solely for powering oil and gas infrastructure. The UK public gain nothing from this. (2)

To send a clear signal that it wants companies to invest in an affordable, renewable energy supply, this government needs to stop issuing new oil and gas licenses and stop approving new North Sea projects, like BP’s Clair South extension or Shell's Jackdaw field. And if they really want to lower people’s bills, they could do so tomorrow by imposing a windfall tax.

Instead Ministers are choosing to do nothing, leaving oil and gas giants like BP to sit on piles of cash while the rest of us struggle with soaring energy bills.

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(1) Capital Economics was commissioned by Uplift to undertake an extensive literature review, which includes data collection from Thomson Reuters Eikon, reviews of individual company reports, press releases, reports by investor services such as S&P Global, financial statements and stated strategies of a sample of oil and gas companies, including BP. In addition, in the limited cases where data were not available, they drew on respected public sources to inform our views on the historical trends in the global energy mix, including research results published by international non-profit climate change organisation CDP.

(2) Uplift used publicly available data to identify renewables investments for a wider group of UK oil and gas companies. A list of 49 active producers operating on the UK Continental Shelf was obtained through Rystad Energy. Of these, all 49 had a publicly available website. Websites and relevant policy documents were reviewed for current investments in renewable energy across their UK and global operations.