BP to scale back green target despite record profits

BP has scaled back its climate ambitions to cut oil and gas production by 2030, after soaring fossil fuel prices helped the energy giant reach the highest profits in its 114-year history.

In what will be seen as a major U-turn which will anger campaigners, the oil and gas giant cut its emissions pledge and said it plans a greater production of oil and gas over the next seven years compared with previous targets.

BP’S profits more than doubled to $27.7 billion (£23bn) in 2022, compared with $12.8bn the year before.

It comes hot on the heels of Shell announcing record annual profits doubled in a year to $39.9bn (£32.2bn) afer energy prices surged in the wake of Russia’s invasion of Ukraine.

The gains of Europe’s largest oil and gas companies doubled from a year earlier and were the highest in its 115-year history, outstripping the previous record of $31bn in 2008.

In the wake of Shell’s profits, the Labour party asked for Britain’s energy profits levy to be revamped to capture more of the exceptional earnings made by oil and gas firms.

Three years ago, BP chief executive Bernard Looney launched a commitment to cut oil and gas production by 40 per cent to cut the group’s emissions and move to lowercarbon forms of energy.

But now the energy giant changed its plans to cut production, indicating that oil and gas output in 2030 was now expected to be only 25% lower.

Following the record profits, Mr Looney said BP would spend $8bn more on its “transition” businesses — biofuels, convenience, charging, renewables and hydrogen — between now and 2030 than previously planned.

However, the group said it would also increase its oil and gas investments by the same amount, targeting “short-cycle fast-payback opportunities with lower additional operational emissions”.

“It’s clearer than ever after the past three years that the world needs energy that is secure and affordable as well as lower-carbon,” he said.

BP said it had incurred total taxes of $15bn worldwide – its highest annual total. In the North Sea, which it said accounts for less than 10% of global profits, it will pay $2.2bn (£1.82m) in tax for 2022, including $700m (£581.3m) because of UK windfall taxes, known as the energy profits levy.

In November, it said it expected to pay $800m in windfall tax on its North Sea operations.

PM Rishi Sunak introduced the windfall tax when he was chancellor, describing it as a 25% Energy Profits Levy. The levy applies to profits made from extracting UK oil and gas, but not from other activities such as refining oil and selling petrol and diesel on forecourts. Current Chancellor Jeremy Hunt said it would £40bn over six years.

The windfalls of war... coming directly out of the pockets of the British people

Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate. Along with the new windfall tax, that takes their total tax rate to 75%.

Ed Miliband, Labour’s shadow climate change and net zero secretary, said: “It’s yet another day of enormous profits at an energy giant, the windfalls of war, coming directly out of the pockets of the British people.”

But trade body Offshore Energies UK said that the rate of UK tax is already so high it risks driving companies out of UK waters.

“All parties have acknowledged that we will need oil and gas for decades to come. so why risk damaging our own secure supplies from the North Sea?

“That will reduce production, undermine the UK’S energy security, destroy jobs and ironically, drive down tax revenues.”