BP hit with windfall tax as revenue greater than doubles to $8.2bn

BP’s earnings greater than doubled within the third quarter to $8.2bn (£7.1bn), even because it paid the Authorities’s windfall tax for the primary time.

On the again of hovering oil and gasoline costs, the vitality large’s earnings for July to September had been up from $3.3bn a 12 months in the past.

However in contrast to rival Shell, which didn’t pay the windfall tax as a result of investments, BP revealed it had booked $778m to pay underneath the brand new “vitality earnings levy”. The tax fee quantities to round 9.5pc of BP’s earnings within the third quarter.

The momentary tax on North Sea earnings was launched in Could by then-chancellor Rishi Sunak after the surge in oil and gasoline costs attributable to the Ukraine warfare. It applies till December 2025.

Nevertheless, BP’s sturdy efficiency comes because the Authorities is drawing up plans to broaden the windfall tax.

Mr Sunak, the brand new Prime Minister, is known to be contemplating a variety of proposals together with rising the levy, extending the deadline and increasing its remit to incorporate renewable vitality turbines comparable to wind farms.

BP stated the present levy resulted in its efficient tax price ticking up marginally, to 37pc within the third quarter. The quantity it paid within the third quarter amounted to about 9.5pc of its earnings.

The corporate’s sturdy earnings had been pushed by “distinctive” gasoline advertising and marketing and buying and selling, at the same time as oil costs eased.

Bernard Looney, BP’s boss, stated: “We stay targeted on serving to to unravel the vitality trilemma – safe, reasonably priced and decrease carbon vitality.

“We’re offering the oil and gasoline the world wants in the present day – whereas on the identical time – investing to speed up the vitality transition.”

The chief government is alleged to have raised eyebrows in Whitehall earlier this 12 months when he described his firm as a “money machine”, earlier than the windfall tax was launched.

In a lift to shareholders on Tuesday, BP introduced one other share buyback price $2.5bn within the fourth quarter.

Joshua Warner, market analyst at Metropolis Index, stated BP’s quarterly earnings had been “one other massive beat” for the corporate, as analysts had anticipated $6.2bn.

However he added: “Earnings are down from the report figures we noticed within the second quarter, which does elevate the query of whether or not we have now reached the height.

“Nonetheless, BP is assured oil costs will stay elevated within the fourth quarter after OPEC+ [the oil producers’ cartel] agreed to chop provides, whereas the warfare in Ukraine and sanctions on Russia means pure gasoline costs are more likely to stay excessive throughout Europe.”

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Nevertheless, Buddies of the Earth stated the figures confirmed the necessity for an even bigger windfall tax, accusing oil and gasoline firms of utilizing “ridiculous loopholes” to pay “the naked minimal”.

The teams’ vitality spokesman, Sana Yusuf, stated: “With the financial system sinking, vitality payments hovering and the local weather disaster deepening, Rishi Sunak should absolutely act on the extreme earnings that fossil gasoline companies like BP are raking in.”

Alok Sharma, the president of COP26 and the Authorities’s local weather tsar, backed an enlargement of the vitality windfall tax. Mr Sharma stated: “We have to elevate extra money from a windfall tax on oil and gasoline firms and actively encourage them to spend money on renewables.”

BP’s fee of the vitality earnings levy was in distinction to Shell, which stated it had not paid the tax as a result of giant investments within the UK. The Authorities has stated it expects the levy to boost £5bn a 12 months.

Ministers launched the measure after oil and gasoline costs surged within the wake of Russia’s invasion of Ukraine.

The value rises have pushed greater gasoline and vitality payments for hundreds of thousands of households.

In a bid to restrict the injury, the Authorities is limiting the worth of gasoline and electrical energy this winter underneath the Vitality Worth Assure.

Nevertheless, after initially promising it could final for 2 years, the assure will now finish in its present kind in April and get replaced with a brand new scheme focused at “these in want”, Chancellor Jeremy Hunt introduced.