BP profits drop after Russia-Ukraine war windfall fades

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by Noor Nanji & Jennifer Meierhans at bbc.com

Oil giant BP profits has reported a steep fall in profits between April and June after energy prices fell back from spikes caused by Russia’s war with Ukraine.

The firm said its underlying profits dropped to $2.5bn (£2bn).

That compares to a $8.4bn gain it reported in the same three months last year, a period covering the early stages of Russia’s assault on Ukraine.

Wholesale oil and gas prices have fallen back sharply since last year.

However, energy giants such as BP and its rival Shell continue to make strong profits. Shell recently reported $5.1bn in income for the April to June quarter.

Nick Butler, visiting professor at King’s College London and a former BP executive, said the results are “back to something like normality pre-Covid, pre-Ukraine”.

BP said it paid $970m tax on its North Sea business between January and June. Nearly half of that was due to the Energy Profits Levy, or the so-called windfall tax.

On Monday, Prime Minister Rishi Sunak announced plans to extract more fossil fuel from the North Sea when he said the government would grant 100 new oil and gas licences for the region.

Mr Sunak defended the decision, claiming it was “entirely consistent” with government climate commitments to reach net zero by 2050.

Net zero means no longer adding to the total amount of greenhouse gases in the atmosphere.

However, critics said the plans showed the government was not serious about tackling climate change.

Shadow climate change secretary Ed Miliband said Mr Sunak’s “weak and confused policy… will do nothing for our energy security, and drive a coach and horses through our climate commitments”.

Imogen Dow at Friends of the Earth said “the drop in wholesale gas and oil prices is yet to make any material difference to the nation’s bills, which are projected to remain high for some time to come”.

She added: “If soaring energy prices have taught us anything, it’s that we need to get off oil and gas for good – not forge ahead with hundreds of new licences as the prime minister announced yesterday.”

Earlier this year, BP announced that it was scaling back its climate targets.

It had previously promised that emissions would be 35-40% lower by the end of this decade. But in February, it said it was now targeting a 20-30% cut.

BP also scaled back cuts to its oil output. It had originally said it wanted to cut production by 40% from levels in 2019. It will now reduce output by 25% to two million barrels of per day by 2030.

Mr Butler said there was a “cloud of uncertainty over North Sea investment now” because of the possibility of a change in government.

“I think the industry will probably invest only a limited amount until there’s better clarity on that,” he said.

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