Shell beats forecasts as profits more than double

Shell has reported profits have more than doubled between July and September helped by high oil and gas prices.

The energy giant said underlying profits reached $9.5bn (£8.2bn) in the third quarter.

That compares to $4.2bn during the same period last year though it is a slowdown from the second quarter when it announced record figures.

The invasion of Ukraine sparked oil and gas prices to rise as nations pledged to cut dependence on Russian energy.

Between April and June, Shell reported record profit of $11.5bn as oil prices surged to $120 a barrel.

Since then, energy prices have fallen back but remain at elevated levels and Shell had forecast its run of record profits would end.

So far this year, Shell has reported profits of $30bn which is more than double the amount it made over the first nine months of 2021. The company plans to reward its shareholders with a 15% increase in its regular dividend, and is on track to break its record annual profit in 2008 of $31bn.

But the higher payout for shareholders “may well raise a few eyebrows”, said Stuart Lamont, investment manager at RBC Brewin Dolphin, with Shell’s bumper profits coming at a time when UK households are facing high energy bills.

Fellow energy company TotalEnergies also released results on Thursday, posting third quarter profits of $9.86bn, compared with $4.77bn a year ago.

The government has imposed a 25% windfall tax on energy companies. However, the tax applies to profit made in the UK which, for most oil and gas companies, is a small part of their operations.

Jonathan Gant, fossil fuels campaigner at Global Witness, said oil and gas companies were “the architects and beneficiaries” of a “broken energy system”.

He said it was “blindingly obvious” that energy firms were “sitting on an untapped gold mine”.

“Pensioners are going cold, children are going to school hungry, and people are scared for what winter will bring,” he said.

“It’s time to stop punishing people for a system they didn’t create and take the money this country desperately needs from the immense profits Shell and other energy companies are enjoying.”

Asked if the government should raise the windfall tax on firms, government minister Nadhim Zahawi told the BBC’s Today programme that Shell and other energy giants pay “double the corporation tax” and a windfall tax.

He said Prime Minister Rishi Sunak had introduced the windfall tax when he was chancellor of the exchequer in a “very smart way”, because it had an “incentive for investment”.

“We need them to invest in the North Sea assets to grow our production,” he added.

Energy bills have been limited for six months by the government’s Energy Price Guarantee scheme, but there have been warnings typical household gas and electric costs could reach £4,347 a year from April, when the support is scaled back.

Shell’s chief executive Ben van Beurden, who is stepping down at the end of 2022, said the company was delivering “robust results at a time of ongoing volatility in global energy markets”.

He said the company was “working closely” with governments and customers to “address their short and long-term energy needs”.

Nathan Piper, an oil and gas analyst at Investec, said fears of recession across world economies had led to oil prices dropping globally, while gas prices for the UK had dropped from 550p per therm in the summer to about 50p per therm.

“This follows Europe refilling gas storage and unseasonably mild windy weather,” Mr Piper told the BBC.

“However, this is likely to be short-lived ahead of colder winter weather and associated increases in gas demand for heating.”

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