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BP posts record profit and boosts investment in oil and gas

<i>Stefani Reynolds/AFP/Getty Images</i><br/>BP's annual profit more than doubled last year to an all-time high of nearly $28 billion. Pictured is a BP gas station in Washington
AFP via Getty Images
Stefani Reynolds/AFP/Getty Images
BP's annual profit more than doubled last year to an all-time high of nearly $28 billion. Pictured is a BP gas station in Washington

By Michelle Toh and Anna Cooban, CNN

BP’s annual profit more than doubled last year to an all-time high of nearly $28 billion, extending a record run of earnings for the world’s oil majors that is fueling calls for higher taxes on the windfall gains.

The British energy company also announced Tuesday that it would invest more in oil and gas over the course of this decade, while reducing its carbon emissions by less than previously planned.

BP said in a statement that underlying replacement cost profit rose to $27.7 billion in 2022 from $12.8 billion the previous year. The metric is a key indicator of oil companies’ profitability.

The profits top the company’s previous annual record of $26.3 billion, achieved in 2008.

BP also unveiled a further $2.75 billion in share buybacks and hiked its dividend for the fourth quarter by around 10% to 6.61 cents per share.

BP’s shares rose 6% in Tuesday trading following the news. Over the past 12 months, its shares have soared 24%.

The earnings are the latest in a string of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of skyrocketing oil and gas prices.

BP said it aimed to boost investment in oil and gas projects by up to $8 billion by the end of the decade in order to “meet near-term demand.”

‘[BP] also now anticipates retaining some oil and gas assets longer than previously envisaged,” the firm added.

At the same time, BP now aims to cut emissions from the carbon in its oil and gas production by 20%-30% by 2030 compared with a 2019 baseline, downgrading the target from 35%-40%.

Last week, another energy major Shell reported a record profit of almost $40 billion for 2022, more than double what it raked in the previous year after oil and gas prices jumped following Russia’s invasion of Ukraine.

Windfall tax

The war’s effect on UK households has been a surge in energy costs, with the average gas and electricity bill due to increase again from the start of April.

The stunning corporate results have amplified calls for the UK government to impose higher windfall taxes on energy companies.

Last year, Prime Minister Rishi Sunak — then finance minister — introduced a 25% tax on profits made from extracting oil and gas in the North Sea. Last month, the government increased that tax, called the energy profits levy, to 35% and extended it to March 2028.

BP told CNN that it expected to pay $2.2 billion in UK taxes for 2022, with $700 million of that related to the UK energy profits levy.

Nick Butler, a former BP executive, told BBC Radio Tuesday that the company made most of its profits outside of the United Kingdom.

“I’m sure there will be more pressure for windfall taxes… I think people should be aware that this is a temporary situation. Oil and gas prices are going down,” he said.

Butler added that the firm was “rebalancing their strategy a bit to invest in oil and gas for a bit longer, and at a higher level, as well as renewables.”

— Hanna Ziady contributed reporting.

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