Home Business NewsBusiness Shell profit beats expectations amid windfall tax talk

Shell profit beats expectations amid windfall tax talk

by LLB Reporter
5th May 22 10:26 am

Like BP, Shell will have done nothing to quieten voices calling for a windfall tax on the oil and gas sector after its latest update – with profit coming in ahead of expectations and up significantly quarter-on-quarter.

Shell doesn’t even have the fig leaf of flagging major investment in the UK alongside its statement, something BP pushed with its own bumper profit announcement on Tuesday. While Shell also faces multi-billion-dollar costs associated with an exit from Russia these aren’t on the scale of those endured by BP.

Shell is enjoying the benefits of higher commodity prices, which in turn have been heavily inflated by the conflict in Ukraine, at a time when ordinary Britons are struggling with soaring energy bills.

Plans to allocate significant sums to share buybacks and increase its dividend will not go down that well in the circumstances and the political pressure to do something may become unanswerable, particularly if the incumbent Conservative Government endures a pasting in today’s local elections.

Whether a windfall tax is introduced or not, Shell finds itself in a much stronger financial position than it was in even before the pandemic, with net debt down from nearly $80 billion to less than $50 billion.

“As well as reducing interest costs and enabling shareholder returns, this stronger balance sheet makes it easier for Shell to fund its transition away from fossil fuels – which come with a whole lot of environmental and, as the last few months have shown, geopolitical mess attached,” said AJ Bell’s Russ Mould.

“If Shell can show it is making real progress in becoming a cleaner and greener energy business, while also supporting countries’ energy security, it may help divert the unwanted attentions of the public and politicians.”

Leave a Commment

You may also like

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]