Johnson rules out UK windfall tax as BP profits gush to €6bn

Company’s huge profit prompted calls from opposition politicians and activists for the government to take some of that money and use it to help consumers

British prime minister Boris Johnson: Windfall tax on energy companies' earnings would 'discourage them from making investments we want to see, that in the end will keep prices lower for everybody'.

British prime minister Boris Johnson appeared to rule out a windfall tax on energy companies after BP promised to channel billions of pounds of its profits into UK investments.

If the country was to levy such a tax on energy firms’ earnings, which are surging due to high oil and gas prices, that would “discourage them from making investments we want to see, that in the end will keep prices lower for everybody”, Mr Johnson said in an interview. 

His comments came just hours after BP said its first-quarter net income, excluding accounting charges related to its exit from Russia, more than doubled to $6.25bn (€6bn).

The company’s huge profit — the highest in a more than a decade — prompted calls from opposition politicians and activists for the government to take some of that money and use it to help consumers. 

Europe’s largest energy companies have targets on their backs as the vast financial gains from high oil, gas and electricity prices coincide with a cost-of-living crisis for millions of people. 

Italy earlier this week raised its windfall tax on profits in the energy industry to 25% from 10% while approving a €14bn aid package to shore up companies and consumers hit by surging costs.

Last week, British chancellor Rishi Sunak said he could consider a windfall tax if energy companies don’t do enough to invest in developing domestic supplies. 

As BP reported its first-quarter results, it seemed to respond to this challenge with a promise to increase the proportion of its spending in the UK and be a company that is “backing Britain”.

Chief executive Bernard Looney pledged £18bn of spending by 2030 on North Sea oil and gas as well as low-carbon energy sources. Britain's business secretary Kwasi Kwarteng welcomed the move. 

Mr Looney also argued that the additional returns for investors announced by his company would benefit the whole country. 

“If you’re paying into a pension in the UK, you’re going to be impacted by that $2.5bn buyback that we announced,” he said in an interview with Bloomberg TV. 

“These are not faceless institutions, these are everyday people in Britain," he said.

Shell, Europe’s largest energy company that is also based in London, will publish its results on Thursday. 

French oil and gas giant TotalEnergies promised to boost investments in the North Sea when it reported a big increase in profit last week. 

• Bloomberg