8.15am update: Thursday January 31 2008
Shell was accused of making “obscene” profits at a time when pensioners, motorists and industry are struggling with higher energy prices when it unveiled annual earnings of $27.6bn (£13.9bn).
The oil major has made British corporate history with the record figures, which are equivalent to more than £1.5m an hour and come at the end of a three month period when crude prices have averaged over $90 a barrel.
Jeroen van der Veer, chief executive of Royal Dutch Shell, described the performance as “satisfactory” and admitted that overall production for the year had actually dropped 2%.
He said the company had benefited from launching new oil and gas projects but had suffered in the last quarter from weak refining margins.
“We are proceeding with the rejuvenation of our portfolio with investment in new legacy assets and through disposals. The execution of our strategy is on track.”
But Tony Woodley, joint general secretary of Unite the union, Britain’s largest trade union said a windfall tax should be imposed on “greedy” companies such as Shell whose profits are more than four times higher than retailer, Tesco.
“Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price and struggling,” said Mr. Woodley. “Record profits of over thirteen and a half billion pounds at Shell and cumulative oil industry profits in excess of fifty billion in the last three years are, quite frankly, obscene. It is time the government acted.”
A windfall tax would be the “right and proper” thing to do over and above the normal taxes the oil companies would pay.
“The oil companies can maintain their investment programmes, maintain their explorations, pay their normal taxes, maintain good returns to shareholders but still put their hands in their treasure chests and pay a windfall tax,” he added.
Motorist organisations have already complained about pump prices soaring to over £1 a litre and although the government tax take makes up much of that price, the Road Haulage Association described Shell’s profits as “absolutely scandalous”.
The full year profits at Shell were 9% up on last time whilst the last quarter figures were up 11%, but no details were provided of the profits made from petrol sales.
The Anglo-Dutch company has declared an 11% rise in the last quarter dividend and expects a similar increase in the first quarter dividend. It spent $4.4bn last year buying back its own shares and has spent $26bn on new oil and gas schemes.