Shell's record $40bn profit puts spotlight back on energy giants 

The annual profit of $39.9bn far exceeded the previous record of $31bn in 2008.

Shell delivered a record $40bn (€36.7bn) profit in 2022, the energy giant said, capping a tumultuous year in which a surge in energy prices after Russia's invasion of Ukraine allowed it to hand shareholders unprecedented returns.

The British company's record earnings, which more than doubled from a year earlier, mirror those reported by US rivals earlier this week and are certain to intensify pressure on governments to further raise taxes on the sector.

"We intend to remain disciplined while delivering compelling shareholder returns," chief executive Wael Sawan said in a statement on the first set of earnings since he took the helm this year. 

Shell also posted record fourth-quarter profit of $9.8bn on the back of a strong recovery in earnings from liquefied natural gas, or LNG trading, beating analyst forecasts for an $8 billion profit.

The annual profit of $39.9bn far exceeded the previous record of $31bn in 2008. It was driven by higher oil and gas prices, robust refining margins and a strong trading. Shell shares were little changed in the session. 

Earnings from its LNG division reached $6bn, a record high, boosted by strong overall trading earnings on the back the gas price volatility, despite recording a loss in the third quarter and a sharp drop in liquefaction volumes due to outages at LNG facilities.

Windfall taxes

Governments struggling with soaring energy bills have responded by imposing windfall taxes on the energy sector, but the British Labour opposition party said Prime Minister Rishi Sunak was not doing enough.

"The government is letting the fossil fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax," Labour's climate policy spokesperson Ed Miliband said in a statement.

Shell said it expects to incur around $2.4bn in accounting costs related to the windfall levies in 2022, and that it will pay $500m in cash tax in Britain this year.

Mr Sawan, who earlier this week announced changes to Shell's structure, sought to convey a sense of continuation of his predecessor Ben van Beurden's strategy.

"The company is in very good health. We have absolutely the right strategy and my core focus over the coming decade is to make sure that I can support the company as we operationalise strategy," Mr Sawan told reporters. Shell will update investors on its strategy in June.

Dividend

As previously announced, Shell boosted its dividend by 15% in the fourth quarter, the fifth increase since it delivered a more than 60% cut in the wake of the 2020 Covid-19 pandemic.

The company also announced a new $4bn share buyback programme over the next three months, unchanged from the previous three. It bought back $19bn in shares in the year to February 2023, nearly double the total in pre-pandemic 2019.

The profits helped Shell and many other Western energy companies mask huge writedowns they took on Russian assets they abruptly exited after the conflict broke out. Shell however said it continued to export some LNG from Russia. 

Reuters